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Power Crisis in Pakistan:Reasons, Effects andeasons, Effects andRecommendationsecommendations

A Theoretical AnalysisTheoretical AnalysisBy:Faisal Mehmood

Abubaker Bhatti

Omar Khan

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Introduction

An appraisal of PakistansElectricity Crisis

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Electricity Demand inPakistan Primary Determinants

GDP

Real Income

Climate Real Price of Electricity

Technology

Income Elasticity of Electricity Demand Households

Industrial Sector

Agriculture

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Percentage use of Electricity by Sector

-EPRA ElectricityConsumption

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Electricity Supply inPakistan

Primary Determinants State of Infrastructure

FDI Efficiency of Management

Effective Forecasting andPlanning

Supply of Raw Materials

Budgetary Policies: PSDPexpenditure

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Disequilibrium

Reasons & Extent Lack of Strategic

Planning, PoliticalInstability

Budgetary Constraints

Lack of FDI

Lack of EfficientDistribution System

Limited R & D

expenditures

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Government Policies

Medium Term DevelopmentFramework 2005-10

Concept of Energy Security Larger Budgetary Allocations (PSDP)

Maximizing generation throughindigenous coal to increase its share

to at least 18 percent (20,000 MW)by 2030;

Enhancing the electricity DistributionSystem

Encoura in Private Sector

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Current Budget (2009-2010)

PSDP allocations for the power sector increased by100 percent, from Rs 11.4 billion in Fiscal Year2008/09 to Rs 22.8 billion during Fiscal Year2009/10

Paying Off Pepco Obligations

Media Spending on Awareness campaigns

Infrastructure development to reduce energy losses. Investment in Alternative Energy Sources like Wind

and Solar Power

Attracting FDI in the Power sector .

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Major Effects

Loss of Output Decline in exports

Price Competitivenessaffected

Reduction in FDI

Lack of Energy SecurityDecline in Standard ofLiving

Inability to plan the

Future

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The Impact of IPPs

Pakistan: 5thLargestIPP Market in the

World (Wohooo!!!)

Higher Costs 73% of IPPs in

Pakistan using Oilfor Electricityproduction

Inflated ProfitMar ins

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Inflexible and UncompetitiveExposure to Exchange Rate RiskThe Problem of Circular DebtCorruption and Political InfluenceRegulation and Legality Problems

Compromise on Sovereignty

OverallIPPs are only good for SHORT TERM

electricity generation

The Impact of IPPs

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Recommendations

Alternate ways ofElectricity Generationrequired Coal reserves Nuclear power Plants Wind Turbines

Effective Long Term

Strategic Planning Diplomatic Efforts for

Procurement ofNuclear Power

technology

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Thank You