# Energy crisis of Pakistan and ways to counter it

19-06-2025
[[Pakistan Affairs]] [[pakistan issues]]

Energy is the lifeblood of any economy. Pakistan, despite its vast natural resources and potential for renewable energy, continues to face a chronic energy crisis that hinders its economic growth, industrial productivity, and public welfare. This crisis is due to power shortages, circular debt, and inefficient infrastructure. Tackling this multifaceted crisis requires a combination of structural reforms, investments in renewable energy, and strengthening institutions.

### Causes of Energy Crises in Pakistan 

**Over-reliance on Imported Fossil Fuels**
- About 60-65% of Pakistan's total electrical energy is generated from fossil fuels like oil and gas.
- This leads to Pakistan importing huge amounts of fossil fuels, which strains foreign reserves (e.g., LNG imports from Qatar).
- Volatility in global oil prices leads to unpredictable electricity costs.

**Circular Debt in the Energy Sector**
- Pakistan faces a crippling circular debt issue in its energy sector where the government owes money to power DISCOs (Distribution Companies, LESCO, K-Electric, etc.), and the DISCOs owe money to CPPA-G (Central Power Purchasing Agency - Guaranteed), which itself owes money to the IPPs (Independent Power Producers) and WAPDA.
- This is due to the government's inability to recover billing and stop electricity theft, which then leads to frequent power outages and load shedding.

**Poor Power Distribution Infrastructure**
- Outdated grid infrastructure causes losses and frequent breakdowns.
- Total transmission and distribution loss stands at approximately 17% (against international standard of 6-8%).
- Load shedding itself disproportionately affects rural areas where there isn't adequate distribution of power.

**Lack of Investment in Renewable Energy**
- While there is a vast potential for solar energy production (2.9 million MW), wind energy production (50,000 MW), and hydel (60,000 MW), only 3% of the energy comes from solar and wind.
- Bureaucratic hurdles and a lack of proper policies deter investors.

**Inefficient Usage and Wastage**
- Energy inefficiency in domestic and industrial applications.
- Lack of an energy conservation culture.
- Buildings and transport remain poorly optimized for conservative energy use.

**Climate Change Challenges**
- The second biggest source of energy in Pakistan is through hydel projects.
- But hydropower generation is threatened due to climate change effects such as glacier melting and erratic rainfall patterns.

**Geopolitical and Environmental Challenges**
- Security concerns affect energy projects, such as the situation in Balochistan affecting CPEC sites.

### Consequences of the Energy Crisis 

**Industrial Output Loss**
- Factories operate at below capacity due to frequent outages.
- Factories also have to pay heavy bills, which severely impacts their ability to make a profit, which in turn hinders their growth.

**Unemployment**
- Due to low growth of industrial and agricultural sectors, and their low productivity, unemployment remains high, especially in rural areas.

**Inflation**
- High costs of electricity also lead to higher costs in production, which leads to price hikes in all consumer products.

### Solution to Counter Energy Crisis 

**Diversifying Energy Mix**
- Increasing the share of renewable energy production to at least 30% by 2030 could alleviate many of the problems Pakistan faces due to energy.
- Encouraging hybrid models like solar-wind, solar-gas in off-grid areas.

**Reducing Circular Debt**
- Eliminate subsidies and shift to direct cash transfers.
- Improve recovery rates through smart metering and prepaid billing.
- Restructuring of DISCOs and performance-based privatization.

**Upgrade Transmission and Distribution Infrastructure**
- Invest in smart grids and reduce losses via advanced metering infrastructure (AMI).
- Use GIS mapping and data analysis to detect high loss areas and automate energy response.

**Encourage Private Sector and Foreign Direct Investment (FDI)**
- Create a One-Stop operation for energy investors.
- Streamline regulatory approval so the process of getting a permit is easy for foreign investors.

**Promote Energy Efficiency and Energy Conservation**
- Enforce energy conservation regulations in industries and buildings.
- Launch mass awareness campaigns for the general public.
- Encourage the adoption of LED and Direct Current motors to conserve energy in urban and residential areas.

**Regional Energy Cooperation**
- Participate in regional projects like CASA-1000 to import 1000MW from Central Asia.
- Leverage CPEC energy corridor to diversify power projects..


         Diversification    →    Renewable Energy, Nuclear, Hydel
              ↓
       Efficiency Reform    →    T&D Losses, Smart Grids, Subsidies
              ↓
       Governance Reform    →    Policy Continuity, Institutional Coordination
              ↓
      Regional Integration  →    CASA-1000, CPEC, LNG Imports


>_"Energy security is not a technical problem; it is a political choice."_ — **Daniel Yergin**, Energy Historian

# References
https://www.economist.com/asia/2017/11/09/pakistans-government-is-fixing-a-power-shortage
https://www.economist.com/finance-and-economics/2025/02/13/cheap-solar-power-is-sending-electrical-grids-into-a-death-spiral
https://www.economist.com/banyan/2012/05/21/power-politics
https://www.youtube.com/watch?v=EzvTHmGJBZ4