Addressing Pakistan’s Energy Crisis: Challenges and Solutions

Energy security and self-reliance are fundamental prerequisites for the progress and prosperity of any nation. There is an inseparable link between these elements and the overall development of a country.

In today’s world, nations that are self-reliant in their energy supplies enjoy a prosperous status. However, those that face consistent energy shortages lag far behind in economic development and modernization, both of which rely on a constant supply of energy.

Unfortunately, Pakistan is one of the states battling a power crisis that complicates its already challenging industrial development. The crisis can be traced back to the 1990s when the rising need for energy supply was not appropriately managed, leading to a gap between the supply and demand for electricity.

This imbalance has caused severe electricity load-shedding, with approximately 14-16 hours of outages in villages and backward areas and up to 12 hours in cities like Multan, Lodhran, Mardan, and Parachinar. Even Karachi, the city of lights, faced load shedding of up to 8-10 hours in some areas.

The crisis has also resulted in inflated energy prices, industrial closures, and reduced production in the industrial sector. The shortfall currently stands at around 7800 megawatts and is likely to increase in the coming months due to higher demand during summer.

Unfortunately, no serious efforts are being made to improve production.

There are numerous interconnected reasons for this crisis. One is heavy reliance on fossil fuels such as coal and oil for power generation. About 59% of the total energy produced in Pakistan is generated using non-renewable energy resources, most of which are imported.

This reliance leads to costly electricity generation and makes the energy sector vulnerable to global price fluctuations. Furthermore, it strains the country’s foreign exchange reserves, ultimately preventing policymakers from expanding energy production.

Another primary reason for the shortage is the financial challenges faced by Pakistan’s energy sector. One significant issue is circular debt, accumulating unpaid bills and dues throughout the energy supply chain, from power generation companies to fuel suppliers and distribution companies.

Circular debt has increased to a striking Rs5.5 trillion in 2024 after a series of exponential increments in recent years. This debt cycle disrupts cash flow, impedes investment in new projects, and erodes trust among private investors, further inhibiting growth.

Electricity theft is another significant financial challenge. According to Awais Laghari, the federal minister of energy, Pakistan faces losses worth Rs. 600 billion annually due to electricity theft.

This not only puts the energy sector at a loss but also obstructs growth plans, prevents timely repairs of the generation system, and hinders replacing faulty and inefficient power lines.

Consequently, it increases the per-unit cost of electricity generated, making power generation more of a problem than a solution.

Perhaps the baseline reason for the energy crisis is the lack of political will and consistent, pragmatic policies. Political interference, bureaucratic hurdles, and regulatory inefficiencies contributed to the sector’s downfall.

Lack of long-term planning and using power projects to achieve electoral objectives has led to decisions not in the national interest. An example is the political tussle over the construction of the Kalabagh Dam, which could generate up to 3600 MW of electricity and solve many of Pakistan’s energy problems.

Instead, governments have been busy handing over inexpedient contracts to Independent Power Producers (IPPs), which have burdened Pakistan’s fragile economy.

The crisis has profound socio-economic and developmental impacts, including economic instability, industrial decline, higher unemployment, and increased poverty. It also hinders the provision of essential services like education and healthcare.

Household budgets are strained due to increased reliance on costly alternative energy sources, such as diesel generators.

However, a comprehensive approach can help tackle the crisis. This mainly includes diversifying energy sources and properly exploiting Pakistan’s domestically available energy potential.

This includes approximately 50,000 MW of wind potential, 40,000 MW of solar potential, 40,000 MW of hydroelectric potential, and 100,000 MW of Thar coal electric potential. Diversification can lead to more electricity being available at a lower cost.

Furthermore, a nationwide crackdown on electricity theft, more innovative and long-term policies for power generation, and renegotiation of contracts with IPPs in a more efficient manner can help address this problem.

Moreover, educating the public about energy conservation practices and encouraging community engagement in energy initiatives can promote a culture of responsible energy consumption.

Consistent long-term policies, transparency, and public cooperation are essential to overcoming the power crisis.

Writer Umar Sajjad is student of A Level in Lahore Grammar School (LGS) Gulberg, Lahore. You can reach him at umerrsajjad4929@gmail.com

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