ENERGY CRISES AND ITS IMPACT ON THE ECONOMY OF PAKISTAN

GROUP MEMERBS

M. Ali Malik

Fahad Rasheed

Syed M. Taqi Jaffri

M. Hashim Rana

Arslan Bukhari

INTRODUCTION

An energy crisis is any great bottleneck (or price rise) in the supply of energy resources to an economy. In popular literature though, it often refers to one of the energy sources used at a certain time and place

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Energy runs machinery in factories, lights our cities and powers our vehicles. There has been an enormous increase in the demand for energy as a result of industrial development and population growth. Supply of energy is, therefore, far less than the actual demand.

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The energy sector is an important one for all the various countries of the world, and especially, the countries that are developing from an economic point of view. It has been observed that the energy sector has played a crucial role in the context of the global economy. Prices of oil and such other sources of energy have been affecting the economies of various developing nations and have been playing crucial roles in shaping them.

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Energy resources have depleted! Whatever resources are available are simply too expensive to buy or already acquired by countries which had planned and acted long time ago. Delayed efforts in the exploration sector have not been able to find sufficient amounts of energy resources.

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Pakistan’s economy is performing at a very high note with GDP growing at an exceptional rate, touching 8.35% in 2004-05.In its history of 58 years, there has been only a few golden years where the economy grew above 7%. This year official expectations are that GDP growth rate will be around 6.5 – 7.0%.

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For the coming years, the government is targeting GDP growth rate above 6%. With economy growing at such a pace, the energy requirements are likely to increase with a similar rate. For 2004-05, Pakistan’s energy consumption touched 55.5 MTOE (Million Tons of Oil Equivalent).

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Major energy crises feared

Pakistan is most likely to face a major energy crisis in natural gas, power and oil in the next three to four years that could choke the economic growth for many years to come, official estimates and energy experts suggest.

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Pakistan’s total energy requirement would increase by about 48 per cent to 80 million tons of oil equivalent (MTOE) in 2010 from about 54 MTOE currently, but major initiatives of meeting this gap are far from turning into reality, said a former petroleum minister on condition of anonymity for the simple reason that he had also served the present government.

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Last year’s oil import bill amounted to about $6.5 billion compared with about $3.5 billion in 2004-05, mainly because of higher international oil prices.

Current year’s oil import bill has again been projected by the government at about $6.5 billion on last year’s average prices.

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Petroleum ministry officials are not ready to speak on record about gas import options and resultant overall energy shortfalls because of recent political developments on Iran-Pakistan-India pipeline project and security situation in Afghanistan and non-certification of gas reserves in Turkmenistan.

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Pakistan’s gas reserves are 32.8 TCF at present, with reserve-production ratio in the order of 27 years, considering that domestic production does not grow substantially. Power sector demand represents 41 per cent of total gas consumption, general industries 24 per cent, fertiliser 7.8 per cent and domestic-commercial 22.8 per cent, cement 1.5 per cent and CNG 2.8 per cent.

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Rising oil prices

All predictions now failing and the oil prices are rising and now about to reach 100 $ level. who knows that in market trading if even the customers are buying the oil on +100 $. The reason being given for this enormous rise is the US oil reserves are depleting and therefore customers are ready to purchase the oil at any price available.

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Rising tension between US and Iran is one reason. Some sources are predicting the attack on Iran is imminent.

Emerging economies and developing will suffer most.

Those industries which consume more energy will suffer with maximum. It will lead to rise of inflation shutting down in efficient industries and rising unemployment in third world countries.

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Pakistan economy is already under intense pressure.

Pakistan exports and its all economic activities are dependent of uninterrupted energy supplies for its energy requirement.

Already many textile mills closed down due to higher production costs which make it uneconomical. Further increase in oil prices will definitely bring more strain on existing working units.

 

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Energy crises in Pakistan

Production units were shut. There was severe load shedding through- out the country. APTMA was forced to accept volunteer load shedding each day on all units.

The situation was worsened because Sui Gas Company already stopped the supply of industrial units.

And then naturally the blame game started, starting from the water shortage in Dams to furnace oil transportation problem, violence in Sind and maintenance activity in some independent power producers.

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WAPDA is in favor of large dams and thinks that the delay of construction of large dams was the basic reason for the shortage of power.

Energy is a key factor for the stability and prosperity of Pakistan. If our production units keep on shutting then unemployment will rise and hence street violence will rise.

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Now Government has to make a huge investment in energy sector.

The objective should be utilization of diversified energy resources.

Conventional thermal and coal fired power plants should be established.

Wind powera solution of energy crises

As Pakistan‘s energy needs are immediate, thermal and large hydro-electric plants may not be the solution because such projects may take between 4-12 years to become operational.

In order to meet energy requirement, the best option is exploiting wind energy because wind power projects can start generating electricity within two years.

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Wind energy is the fastest-growing source of power in the world and its globally-installed capacity has risen from 20,000MW in 2001 to 70,000MW in 2006. USA alone is installing 4,500MW per annum and China plans to install 20,000MW by the year 2020.

India offers a good example of a country that has

embraced wind energy and has added substantial electricity generation capacity within a short period of time.

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If Pakistan can realize half the growth that India has achieved, it can add 2,250MW to its electricity supply in the next five years, much more than possible by pursuing thermal power projects.

In fact, wind energy can go a long way in meeting our acute energy shortage.

It is important that the government continues to provide incentives to private investors in the form of an attractive tariff.

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Energy crises and Pakistan

Current acute shortage of electricity in Pakistan clearly implies failure on the part of government to tackle it.

WAPDA authorities often attribute this to the failure to build dams.

Hydroelectricity is the cheapest source of electricity. More over building dams would benefit immensely.

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Nuclear energy There are only 2 nuclear plants providing 2 % of electricity to our country.

Coal Pakistan has world seven largest reserves of coal after the discovery of Thar.

World bank report regarding the sources of energy in various countries and Pakistan. Energy crisis can be resolved if drastic.

Conclusion

The current energy crises in Pakistan is the most bad and horrible problem of Pakistan's history. There is not only energy crisis problem, every thing in Pakistan is in crisis either it is power supply, education, politics, economy even each and every thing. This time is the most difficult time of the history of Pakistan.

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Until now there is not any good step that was taken by government to solve this problem. They must appoint a Wapda chairman who will must be a strong and person, who can take strong decision; he must remove the corruption from this department and should check each and every worker of this department. When every one will do his work on time then this crisis will be solve.