ISLAMABAD, Jan 15: Rise in supply of energy to consumers at affordable prices is an important factor for economic growth in the country.

This was stated by the senior research economist of Pakistan Institute of Development Economics (PIDE), Rehana Siddiqui, while presenting a report titled “Energy and economic growth in Pakistan” here on Wednesday.

The researcher said issue of energy supply and demand was important not only for the economic prosperity of the current generation but also for future generations. Pricing behaviour can play an important role in the use of energy, she added.

She said, while considering deregulation of energy sector, the possible adverse impact on prices and unemployment must also be taken into account.

The privatization process in Pakistan has also resulted in loss of jobs, at least in short-run, she added.

“This will affect the desired outcomes of poverty reduction strategy.”

Ms Rehana said there was a need to develop a mechanism to mitigate the adverse impact of deregulation of energy prices on the poor and unemployed. Sharp fluctuations in energy prices are adding to the uncertainty in economic environment of the country, she added.

“In order to improve balance of payments, another source of energy that can be exploited is solar energy.”

She said policy implementation was another problem in the energy sector.

Citing an example, she said: “Rise in prices affects the demand and consequently the economic growth so pricing policies should also take into account the impact on economic growth.”

The researcher said poverty reduction strategies should focus on expanding access to energy, improve reliability and achieve fiscal sustainability by reducing claims of the sector on budget, reduce fiscal risk due to the energy sector, eliminate subsidies to reduce government liabilities, improve governance, and ensure environmental sustainability.

These efforts should be accompanied by a set of monitoring indicators like availability and affordability of energy related equipment, fiscal discipline for energy utilities, and regulatory framework, she added.

Ms Rehana said the energy strategies should ensure availability of micro credit, rationalization of tariff, improve collection and reduce losses, encourage private sector partnership, improve licensing and regulatory mechanism, and cooperation of local communities in preserving traditional sources of energy.