Reforming The Energy Sector

Reforming The Energy Sector
A principle of economics says “resources are limited, but human wants not limited” implying that proper managing and utilisation of resources plays an important role in our existence. Pakistan among those countries of the world, where natural resources are available but we have failed in proper utilisation and we are now facing multiple socio-economic problems. The dilemma of our power sector is prominent example of mismanaging of available resources due to lack of long term policies and planning.

Pakistan follows mixed-fuel strategies for power generation, but unfortunately with the presence of renewable energy sources, more than 40% of the country’s generation of energy depends upon non-renewable energy sources such as imported fuel which intensify the balance of payment problem along with increasing energy rate and load shedding with devaluation of Pakistani rupees.

According to the Government of Pakistan’s Indicative Generation Capacity Expansion Plan (IGCEP) 2021-30 installed generation capacity during FY 2022, Pakistan’s use of oil in power generation has reduced by 13% in FY 2022 while in FY2015 oil was contributing 35.5% in power generation, but the composition of RLNG which is mainly imported fuel increased from 0.7% to 25% during FY2015 and FY 2022 respectively.

There is huge potential in renewable energy sources, and in the past we have increased energy generation by using renewable energy but we have not used them to an optimum level. During FY2015 power generation by using hydro, nuclear and renewable sources (solar and wind) were 30.4%, 5.4% and 0.7% respectively.  In FY2022 only hydro contribution in power generation was reduced to 26% while other sources contribution was increased with nuclear energy amounting to 9%, wind energy 4%, and solar energy 1%. Beside this change we are not generating power by using renewable energy.

Let us discuss some renewable energy potentials of Pakistan. The generation of power by using solar energy depends upon duration of sunshine during the day. In most parts of Pakistan, the average sunshine period during daylight ranges from eight to ten hours per day. The estimated potential to generate power by using solar in Pakistan is higher than 2900GW. The southwestern of Baluchistan and southeastern of Sindh are most suitable places to generate energy by solar energy as in these areas average sunshine per day is seven to eight hours.

Another source of renewable energy is wind energy; in 2022 the contribution of wind energy in national power generation was 4%. In many developed as well as developing countries now wind energy provides considerable share in total energy production of the countries.

According to the U.S National Renewable Energy Laboratory, the estimated wind energy potential in southern part of Pakistan is 340GW. In 2013, the Pakistan Meteorological Department of Pakistan identified Gharo-Jhimpir corridor in Sindh as most suitable for wind energy with a potential of 11,000MW.

In Pakistan the largest source of renewable energy are hydro power plants which contribute about 25% of total energy annually. Due to high mountains glaciers and canal system in different areas like Khyber Pakhunkha (KPK), Gilgit Baltistan (GB), and Punjab the estimated hydro potential energy potential is 475,000GWH/y.

The energy sector of Pakistan requires serious reforms not only in distribution and transmission policy but also for production. With of passage of time the country’s circular debt is increasing and imported fossil fuel for energy production is the major contributor. The government of Pakistan should look for private public partnership for renewable energy production in Pakistan to ensure that circular debt can be minimised. As renewable energy sources require proper monitoring, without well-trained technicians and staffs such costs will continue to increase.

Similarly, like other sectors, the energy sector is also facing challenges and constraints in the implementation phase. The government of Pakistan allocates million rupees for renewable energy production but later lack of professionalism in bureaucracy and political instability become barriers for implementation of policy and along with technical support program for energy sector staffs, reforms are also required in the bureaucratic structure for proper implementation of policy.

On consumer side high installation cost de, the government needs to offer a subsidy program for households the likes of which had been done in the past when the State Bank of Pakistan set a 6% interest rate on loans for purchasing solar panels for households.

In sum as Pakistan is a heterogeneous not only in term of ethnicity, caste, and color, but also in term of presence of natural resources, the national energy production policy needs to be executed according to the features and availability of resources and of the province/areas.











Wajhullah Fahim is a research student at the Pakistan Institute of Development Economics (PIDE), Islamabad.