Security of energy supplies

Published December 11, 2023

Ensuring reliable and uninterrupted access to energy resources, including electricity, oil, and gas, is critical for the energy security of any country. In Pakistan, this issue is complex and involves various factors.

Pakistan’s vulnerability is evident from its dependence on imported petroleum products (80 per cent of local consumption), natural gas (30pc of local consumption), and LPG supplies (65pc of local consumption), even under constrained consumption levels.

The world has fully recognised that without sufficient energy, economic development is out of the question. The importance of energy supplies is evident in the number of wars fought to acquire them. The concentration of primary resources in specific geographic locations has been a major cause of conflicts over natural resources, as resource-rich nations are often politically, economically or diplomatically weaker or disadvantaged or forced to remain as such.

Despite having a significant young workforce, experts, and abundant natural resources such as minerals, agriculture, mountains, rivers, forests, and four seasons, Pakistan primarily relies on imported energy.

A logical strategy would be to first ensure sufficient supplies and then sustainability, given Pakistan’s low carbon footprint

Additionally, the country has a strategic location with a significant coastline of 1,046 km, but it is yet to harness this potential resource for energy production. Factors such as corruption and mismanagement in the energy sector, political instability, uncertainty, and environmental concerns such as climate change and air pollution play significant roles in creating the current energy crisis.

Instability, uncertainty and corruption have led to inflated costs for projects and contracts, as well as delays in implementation due to bureaucratic red tape. This has resulted in higher prices for consumers and lower returns on investment for private sector partners and affected the entire social-economic system of the country.

Another challenge is the increasing demand for energy due to population growth, urbanisation, and industrialisation. According to a report by the World Bank, Pakistan’s energy demand is projected to increase by 70pc by 2030, while supply is expected to grow by only 45pc. This imbalance could lead to further power shortages and blackouts, hurting economic growth and social welfare.

Pakistan is highly susceptible to the adverse impacts of climate change, including recurring droughts, floods, and extreme weather conditions. There is an urgent need for increased investment in renewable energy sources such as wind, solar, and hydropower, and effective policies should be put in place to mitigate the impacts of climate change, which have been increasing over a period of time.

Furthermore, implementing existing environmental laws effectively will help mitigate environmental hazards like fog, air pollution, deforestation, housing projects, energy-inefficient industries, smoking industries and vehicles.

Access to reliable and affordable energy is also critical for improving health, supporting education and training programs, and promoting economic opportunities for the rural population. To this end, there is a need for greater investment in off-grid solutions such as home solar systems, mini-grids, mini-hydro generators, bio-gas plants, etc, that can provide energy access to rural and remote areas.

Pakistan’s per capita energy consumption is far less than even Bhutan, Maldives, India or Sri Lanka

Since Pakistan’s energy security challenges are similar to those of some other countries, there is a need for greater international cooperation and support to promote sustainable economic development over the long term in developing countries like Pakistan.

While the USA continues to drill and produce as much fossil fuels as possible, it is seeking net zero compliance from other countries, as observed from its calculated statement at COP28.

Pakistan’s per capita energy consumption is far less than even Bhutan, Maldives, India and Sri Lanka, which have 100, 60, 23, and 17 million British Thermal Units (MMBTUs) per capita, respectively. In contrast, Pakistan has only 15.8 MMBTU per capita. Hence, Pakistan must go the extra mile first to secure its day-to-day energy needs and then make long-term sustainable energy supply arrangements for sustainable socio-economic development.

A logical instrumentalisation strategy should be adopted first to secure sufficient and then sustainable energy supplies while working with the world towards its joint obligations towards the net-zero target. Pakistan’s contribution is negligible, having only 0.99 tons per capita CO2 emission, which is much less than numerous countries, but it is hugely affected due to changed weather conditions.

Pakistan must target to mitigate its currently ongoing energy crisis within three years with full sincerity by (i) creating organisational fit throughout the energy value chain; (ii) eliminating corruption/mal-administration; (iii) reducing losses/thefts and recoveries, (iv) consolidating institutions; (v) creating an enabling investment environment; (vi) inculcating research and development aptitude; (vii) focusing on development of solar, wind, bio-gas, and (viii) increasing investment in updating the country’s electricity infrastructure.

Simultaneously, short-term measures such as (i) pushing domestic exploration and production activity; (ii) constructing additional petroleum (finished products, LPG, LNG) import terminals; (iii) creating strategic storage capacities, (iv) increasing refining capacities, (v) installing local solar panel, and accessories manufacturing units; (vi) executing thar coal based gasification-liquid project; and (vii) moving to Euro-VI and VII after consumption optimum systems/engines and machinery is in place, can also be put into place.

The Author is a former Member Gas (OGRA), an energy lawyer, and an independent consultant.
Email: arif@arifassociates.pk

Published in Dawn, The Business and Finance Weekly, December 11th, 2023

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