THE current energy crisis, though also a global problem, has become a critical socio-economic issue for Pakistan and is rooted in the country’s poor governance.

The electricity shortages are mainly due to widespread inefficiency and corruption in the Water and Power Development Authority (Wapda) and the KESC with the decision-makers unable to do anything about it.

The multiple problems include, poor supply-demand management, kunda-system or power thefts, costly input and the rising recurring costs. The peak power shortfall reaches almost 9000 megawatts across the country which is over half of the total national demand.

Many public and private power producers have to shut down their power plants due to suspension of fuel supply because of outstanding dues of power producers to the PSO.

The key players in this “circular debt” trap are the federal and provincial governments, playing havoc with the national grid system. The circular debt is approaching Rs400 billion mainly due to non-payment by the federal and provincial government agencies.

So the question arises: if the government is the biggest debtor and the biggest creditor, why the government managers are unable to resolve the issue? After all, shortages of electricity and energy supplies have impacted the society on a large scale in terms of unemployment, poor living standards, loss in production and much more.

The government frequently imposes electricity and gas rationing across the country in an effort to mitigate its energy shortage but cuts have slowed down production and increased the cost of operating businesses, forcing many small businesses to close and to lay off workers.

The planned and unplanned electricity blackouts, known as loadsheddings, make daily activities a challenge for ordinary citizens, leaving the populace angry and marginalised. The government has doubled the cut-off hours over the past 18 months.

Industrial sector alone has lost more than $4 billion over the last 18 months due to electricity and gas shortages. Small businesses are the worst sufferers of financial losses, some up to 50 per cent, with loadshedding in shopping centres at peak sales hours.

Manufacturing is also hit hard by the cuts, with 8 -12 hours a day, specially in Punjab and causing 30-40 per cent rise in the cost of production. Operation costs have become so high for small industries like soap and smaller steel companies, that some have been forced to close down the entire business and lay off of workers.

On the other hand, shortages of liquefied petroleum gas (LPG) and condensed natural gas (CNG) have been increasingly disrupting household and manufacturing activities, in urban areas. The demand for LPG— widely used for cooking in households— far exceeds the supply.

The government also cannot supply enough CNG, which is used to fuel motor vehicles, and CNG stations around the country, are now being closed down up to three days a week.

The education sector is also one of the worst affected because of the energy crisis. Students cannot study properly because of unannounced blackouts. One of the outcomes of gas shortage is increase in bus fares which has become an additional burden on their parents.

Acute energy crisis has particularly crippled the textile industry. The industry is compelled to reduce its production at least by one-third. Low pressure of gas has resulted into three and a half days gas supply to textile units in a week, especially in the main industrial hubs of Punjab. The textile units are increasingly relying upon the PEPCO feeders in absence of gas supply. Textile’s exports declined by 1.30 per cent during the first five months (July-November) of the ongoing financial year against the same period last year.

Energy demand has increased significantly during the last ten year period, but the supply has failed to match this growth due to policy failures with respect to: (a) setting up viable new power projects (b) increasing exploration of natural gas, crude oil and coal; (c) tapping regional markets and setting up infrastructure for energy imports; (d) effective implementation of energy saving plans; and (e) incentivising development of renewable energy sources.

The supply shortfall of natural gas has ranged between 10-15 per cent of demand. The net demand in the current fiscal year would be around 5.497 Bcf/d which will further expand to around 6.354 Bcf/d by 2015-16, with gas shortfall estimated to expand from 2.458 Bcf/d in 2011-12 to 3.021 Bcf/d in 2015-16 as is obvious from demand-supply position given in table below:

Presently about 70 per cent of crude oil and 55 per cent of POL consumption is met via imports. Pakistan had 28 trillion cubic feet reserves of natural gas in 2006 but due to increase in its demand it is expected to be exhausted in next two decades.

Effective management, check and balance in the transmission and distribution system, starting of new projects and public awareness is the need of the hour to tackle this crisis. Moreover, building hydro-electric dams, tapping gas reserves in Balochistan and coal power plants is needed to be developed on urgent basis.

The major cause of energy crisis is poor governance as Pakistan still has far more options than many other countries in the region. Better energy mix at affordable cost is possible as a fast track measure while we work in parallel on long-term hydro coal and other large projects.

Pakistan has some impressive assets in the energy sector. Our gas distribution and transmission system and network are the world’s largest. We have talented professionals and managers in the energy sector and the country has vast natural energy resources and assets. We only have to create an enabling environment to provide energy fast relief to the nation.