Energy Crisis in Pakistan
are growing rapidly
President recently claimed that construction would soon
begin in Karachi on one of the
tallest buildings in the world. The project, according to the president, would
show the world that Pakistan
is a “progressive and dynamic country and we are second to none”. But unless Pakistan
can light that building, President claims will look silly.
Robust economic growth-rates over the past several years
have encouraged Pakistan
to ignore fundamental weaknesses in the economy. Yes, Pakistan’s
economy is growing; that’s the good news. The bad news is that with this growth
comes higher energy consumption and greater pressure on the country’s energy
resources. Unless Pakistanis — the government, but individual citizens as well
— act now, the country’s future will indeed be dark, in more ways than one.
At present, demand for energy exceeds supply. Power outages
and planned power cuts (euphemistically termed “load-shedding”) are, for many,
an everyday occurrence. In addition to their economic costs, energy shortages
foster political instability. Last summer angry public protests in Karachi
and riots in Liaquatabad demonstrated how close many Pakistanis are to reaching
the limits of their patience. A widespread power outage affecting much of the
country last September triggered panicky rumours of a coup. Earlier this year,
the opposition and the ruling parties staged nearly simultaneous protest
walkouts from the Senate following a disagreement over high domestic oil
prices. This unrest may be only a foretaste of things to come. Absent drastic
action,
Pakistan’s
energy situation is expected to get far worse in the years ahead.
According to the government’s own figures, by 2015, eight
short years from now, energy demand in Pakistan
will be nearly 22 percent greater than projected supply. By 2030, this energy
shortfall will be 64 percent. What do these figures mean for Pakistanis? Higher
prices, fewer jobs in a slowed economy, reduced opportunities, less comfort,
heightened political turmoil.
A Pakistan
with serious energy shortages will not be a pleasant Pakistan.
Today, oil and natural gas supply nearly 80 percent of Pakistan’s
energy needs. However, the consumption of those energy sources vastly exceeds
the indigenous supply. For instance, Pakistan
currently produces less than 20 percent of the oil it consumes. This fosters a
dependency on imported oil that places considerable strain on the country’s
finances. While the present situation with respect to natural gas production is
not nearly as critical, Pakistan’s projected natural gas needs are expected
almost to double (from 2004 levels) by 2010.
On the other hand, hydropower and coal are perhaps
under-utilised today, as Pakistan
has ample potential supplies of both, at a time when these resources provide
for relatively little of Pakistan’s
energy needs. Pakistan’s proven coal reserves are the world’s sixth largest,
and the government intends to increase the share of coal in the overall energy
mix from 7 to 18 percent by 2018 — a course that may make sense from an energy
standpoint, but which carries troubling environmental implications.
Meanwhile, provincial rivalries and widespread public
opposition have significantly slowed the government’s plans to build dams
capable of generating electricity. Many Pakistanis argue that large
hydroelectric projects should be a last resort, after low-cost energy
conservation measures have been fully utilised.
Nuclear power at this point accounts for barely one percent
of Pakistan’s
energy consumption. The government has announced plans to develop a generating
capability of 8,800 megawatts (MW) of nuclear energy by 2020, compared to the
country’s current output of less than 450 MW. But this goal is unlikely to be
reached unless Islamabad is able to
persuade the United States
and other western countries to help it develop civilian nuclear technology, an
idea certain to meet with resistance in the West.
Pakistan’s
renewable energy potential — hydro, wind, and solar — is substantial, although
presently this potential remains largely untapped. Escalating petroleum prices
in recent years have given Pakistan
an additional incentive to invest in renewable energy technologies. In 2003,
the government ambitiously declared that by 2015, 10 percent of the country’s
total energy supply would come from renewable energy sources, and established
the Alternative Energy Development Board to coordinate renewable energy
promotion. Modest steps in the direction of greater reliance on renewable
energy have already been taken.
Nonetheless, renewable energy labours under severe handicaps
in competing with conventional energy — hidden subsidies that allow for lower
conventional energy generation costs, for example, and policies that permit
conventional energy to disregard the costs of the pollution it creates when
pricing power. Unless renewable energy is given a level playing field, a major
expansion of renewable energy generation is unlikely, and the government’s goal
of 10 percent by 2015 will not be met.
Rural areas across India,
Bangladesh, Sri
Lanka, and Nepal
have all implemented successful clean and renewable energy initiatives. Bangladesh,
for instance, has experienced considerable success with solar home systems
financed through micro-financing. Pakistan’s
neighbours have something to teach Pakistan,
if only it will listen.
Pakistan’s
minister for petroleum and natural resources has identified energy as the most important input for the country’s economic development.
The uninterrupted supply of energy to fuel the nation’s economy, he has
declared, should be the highest priority for the country’s economic managers.
Yet the record of past governments does not induce
confidence. It's said by one of Pakistan’s
most distinguished economic analysts, has written of “a colossal failure of
public policy” over six decades, which has left the country with “weak
institutions, inappropriate pricing policies and insufficient public-sector
investment that [has] contributed to what appears to be an inexorable march
towards another crisis”. Pakistan
cannot afford a repetition of this sorry history.
The good news is that Pakistanis are not being asked to find
a cure for cancer, or to discover entirely new methods or technologies in order
to meet their energy needs down the road. There already exists widespread
agreement on at least the broad outlines of an energy strategy for Pakistan.
Pakistan’s
energy managers know what needs to be done.
But solemn promises and soaring rhetoric will not do the
job. Preparing for Pakistan’s energy needs over the next quarter century will
require long-term vision, a national commitment widely shared among the
country’s political and business leaders, inspired leadership sustained from
one government to the next, and most of all, political will to make and carry
out difficult choices.
Pakistan
— the country, not just the government of the day — needs to decide that
muddling through is not enough. Pakistan,
as a country, has to get serious about creating an energy strategy, and then —
and this is the hard part — about implementing it.
Pakistan
will not find itself alone in this task. Islamabad’s
friends around the world believe that it is in their own national interests for
Pakistan to
succeed — which means, among other things, that Pakistan
succeed in its quest for energy security. At the end of the day, Pakistanis
themselves must solve the problem of energy insecurity, but the outside world —
both the private and the public sectors — can and will help.
Energy matters for Pakistan.
If Pakistan is to succeed in its ambitious plans for economic development, if
it is to raise the grossly inadequate living standards of its people, if it is
to achieve the economic growth necessary to ensure political stability, if it
is to begin to address the many environmental problems that up to now have been
largely ignored, and which have a hugely adverse impact on the daily lives of
Pakistani citizens, if it is to live in peace with its neighbours, several of
whom are directly impacted by Pakistani decision-making in the energy sector,
if Pakistan is to move towards all these goals, Pakistanis must get serious
about energy.
