ENERGY CRISIS AND

INDUSTRIAL SECTOR OF
PAKISTAN
Assignment 3

Semester Project (Pakistan study)

Submitted by:
Abeer Sultan

Submitted to:
Sir Waqas Ahsan

Registration number:
SP21-BBA-008

Date of submission:
DECEMBER 21, 2021

Dead line:
DECEMBER 26, 2021
BACKGROUND:
Industrial Sector is of great importance for economic development of every country. It is
historical fact that countries with strong industrial sector have showed more economic growth
and development.
Pakistan Industrial Sector is the second largest individual sector of the economy accounting for
25% of the GDP. This industrial sector comprised of large, medium and small-scale.
At the time of independence the total large scales industrial contribution was only 1.8 percent to
GDP. The small-scale industries however, contributed 4.6 percent to GDP. Now from 2010-11
the large scale industries contributes 4.4 % to the real GDP growth rate while the small scale
industries contributes 7.5 %.
It is evident that even after six decades our industrial sector did not play its role despite having
the potential. Most of the current economic problems in Pakistan are ultimately linked to the
slow pace of industrial development. Rapid industrialization is considered by the economic
experts as the sovereign remedy to put our economy on a sound basis.

MAJOR PROBLEMS ASSOCIATED WITH INDUSTRIAL SECTOR OF

PAKISTAN:
1. Energy crisis
2. Interest rate
3. Poor governance
4. Security concerns etc.
5. These are the major problems associated with the economy of Pakistan since its
independence. But I will debate on the Energy crisis.

ENERGY CRISIS AND INDUSTRIAL

SECTOR OF PAKISTAN:
As I mentioned above that the industrial growth has positive and significant impact on overall
GDP (Gross domestic product).
Many countries including, Taiwan, China and Korea are the best examples of positive
relationship
Between industrial growth and GDP. Industrial sector has also studied impact on export and
import with respect to balance of payment. According to World Bank (2005) electricity serves
as an important input for industrial sector especially for developing countries like Pakistan. In
Pakistan electricity is mainly supplied by two organizations, KARACHI ELECTRICITY
SUPPLY CORPORATION (KESC) and WATER AND POWER DEVELOPMENT
AUTHORITGY (WAPDA). Both firms are engaged in three main activities such as power
generation, distribution and transmission. For regulation NATIONAL ELECTRIC
POWER REGULATORY AUTHORITY (NEPRA) has been playing an important role.
In 2005 Pakistan serious electricity crises experienced due to peak demand from both
domestic and Industrial Consumers. Economic survey of 2008 clearly indicated that in order to
meet current demand. Concerned authorities must have to enhance generation by 50%.

The table of surplus/ deficit in demand and supply during peak hours (NDTC’s) system.

TABLE 1:
Financial year ending Generation capacity Demand (MW) Surplus/deficit
30th June. (MW)
2006 13051 13212 161
2007 13292 15138 1846
2008 12442 16838 4396
2009 13637 17582 4215
2010 12571 18467 5716
2011 13193 18521 5328
2012 12320 18940 6620
2013 14600 18827 4227
2014 16170 20576 4406
2015 16500 21701 5201
2016 17261 22559 5298

And the above table # 1, we can see there is deficit of electricity from 2006 to 2016 and National
Transmission & Dispatch Company (NTDC) is unable to supply required electricity
during peak
Demand. Continuous deficit is shown in the above table #01, maximum shortfall was observed
in
2012 -6,620 and average shortfall is -4,310.

The table of surplus/ deficit in demand and supply during peak hours (K-electric’s) system.

TABLE 2:
 Financial year ending Generation capacity Demand (MW) Surplus/deficit
30th June. (MW)
2006 2117 2223 -106
2007 2283 2349 -66
2008 2265 2443 -178
2009 2403 2462 -59
2010 2393 2562 -169
2011 2237 2565 -328
2012 2163 2596 -433
2013 2246 2778 -532
2014 2601 2929 -328
2015 2632 3056 -424

Similarly, in the above table #02, we can see again there is deficit during peak hours and K-
electric could not meet demand. Highest deficit is in 2013 -532 and average shortfall is -238.

More than 70% industrial units have been closed due to energy crisis and if the situation was not
controlled, there would be serious problems due to massive electricity short fall and gas
suspension.
According to media reports, the industrial production has gone downwards since last two years
due to energy crises in the country.
Economy experts believe that at a time when the country is plunged into difficulties, with the
energy shortages worsening; unemployment in the failing industrial sector is a major concern.

FACTORS:
It would be easy to point a finger at one practice or industry and lay the blame for the entire
energy crisis at their door, but that would be a very naive and unrealistic interpretation of the
cause of the crisis.

1. Overconsumption: The energy crisis is a result of many different strains on our

natural resources, not just one. There is a strain on fossil fuels such as oil, gas and coal
due to overconsumption – which then in turn can put a strain on our water and oxygen
resources by causing pollution.
2. Overpopulation: Another cause of the crisis has been the steady increase in the
world’s population and its demands for fuel and products. No matter what type of food or
products you choose to use – from fair trade and organic to those made from petroleum
products in a sweatshop – not one of them is made or transported without a significant
drain on our energy resources.
 3. Poor Infrastructure: Aging infrastructure of power generating equipment is yet
another reason for energy shortage. Most of the energy producing firms keep on using
outdated equipment that restricts the production of energy. It is the responsibility of
utilities to keep on upgrading the infrastructure and set a high standard of performance.
4. Unexplored Renewable Energy Options: Renewable energy still remains
unused is most of the countries. Most of the energy comes from non-renewable sources
like coal. It still remains the top choice to produce energy. Unless we give renewable
energy a serious thought, the problem of energy crisis cannot be solved. Renewable
energy sources can reduce our dependence on fossil fuels and also helps to reduce
greenhouse gas emissions.
5. Delay in Commissioning of Power Plants: In few countries, there is a
significant delay in commissioning of new power plants that can fill the gap between
demand and supply of energy. The result is that old plants come under huge stress to
meet the daily demand for power. When supply doesn’t matches demand, it results in
load shedding and breakdown.
6. Wastage of Energy: In most parts of the world, people do not realize the
importance of conserving energy. It is only limited to books, internet, newspaper ads, lip
service and seminars. Unless we give it a serious thought, things are not going to change
anytime sooner. Simple things like switching off fans and lights when not in use, using
maximum daylight, walking instead of driving for short distances, using CFL instead of
traditional bulbs, proper insulation for leakage of energy can go a long way in saving
energy. Read here about 151 ways of saving energy.
7. Poor Distribution System: Frequent tripping and breakdown are result of a poor
distribution system.
8. Major Accidents and Natural Calamities: Major accidents like pipeline
burst and natural calamities like eruption of volcanoes, floods, earthquakes can also cause
interruptions to energy supplies. The huge gap between supply and demand of energy can
raise the price of essential items which can give rise to inflation.
9. Wars and Attacks: Wars between countries can also hamper supply of energy. As
it happened in 1965, 1971 and so on. The wars between India and Pakistan affected the
Industrial growth and the Power sector as well.
10. Miscellaneous Factors: Tax hikes, strikes, military coup, political events, severe
hot summers or cold winters can cause sudden increase in demand of energy and can
choke supply. A strike by unions in an oil producing firm can definitely cause an energy
crisis.

These are the factors by which the power industry is effected and due to which the
industrialization is also affected negatively.

SOLUTIONS:
Many of the possible solutions are already in place today, but they have not been widely adopted.
 1. Move towards Renewable Resources: The best possible solution is to
reduce the world’s dependence on non-renewable resources and to improve overall
conservation efforts. Much of the industrial age was created using fossil fuels, but there is
also known technology that uses other types of renewable energies – such as steam, solar
and wind. The major concern isn’t so much that we will run out of gas or oil, but that the
use of coal is going to continue to pollute the atmosphere and destroy other natural
resources in the process of mining the coal that it has to be replaced as an energy source.
This isn’t easy as many of the leading industries use coal, not gas or oil, as their primary
source of power for manufacturing.
2. Buy Energy Efficient products: Replace traditional bulbs with CFL’s and
LED’s. They use less watts of electricity and last longer. If millions of people across the
globe use LED’s and CFL’s for residential and commercial purposes, the demand for
energy can go down and an energy crisis can be averted.
3. Lighting Controls: There are a number of new technologies out there that make
lighting controls that much more interesting and they help to save a lot of energy and
cash in the long run. Preset lighting controls, slide lighting, touch dimmers, integrated
lighting controls are few of the lighting controls that can help to conserve energy and
reduce overall lighting costs.
4. Easier Grid Access: People who use different options to generate power must be
given permission to plug into the grid and getting credit for power you feed into it. The
hassles of getting credit of supplying surplus power back into the grid should be
removed. Apart from that, subsidy on solar panels should be given to encourage more
people to explore renewable options.
5. Energy Simulation: Energy simulation software can be used by big corporates
and corporations to redesign building unit and reduce running business energy cost.
Engineers, architects and designers could use this design to come with most energy
efficient building and reduce carbon footprint.
6. Perform Energy Audit: Energy audit is a process that helps you to identify the
areas where your home or office is losing energy and what steps you can take to improve
energy efficiency. Energy audit when done by a professional can help you to reduce your
carbon footprint, save energy and money and avoid energy crisis.
7. Common Stand on Climate Change: Both developed and developing
countries should adopt a common stand on climate change. They should focus on
reducing greenhouse gas emissions through an effective cross border mechanism. With
current population growth and over consumption of resources, the consequences of global
warming and climate change cannot be ruled out. Both developed and developing
countries must focus on emissions cuts to cut their emission levels to half from current
levels by 2050.

What is Being Done Today?

There are many global initiatives that are working towards resolving the energy crisis in
PAKISTAN. This has taken the form of increased regulation and restriction on carbon
emissions, the promotion of greener manufacturing and construction projects, the funding of
research into hybrid technologies and more sustainable technologies and more. Locally, more
communities are seeing beyond the recycle bin and recognizing that how the community uses
their local resources is important too. More community gardens, parks and farmer’s markets are
springing up not only as a means of introducing more sustainable elements into people’s, but as
an important part of educating the public about the importance of resources.

CONCLUSION:
From above discussion we concluded that the Pakistan have to take this serious issue on contingency
basis. Power is a serious issue or it is a great threat to the economy of Pakistan. Most industries of
Pakistan depends upon the power and the power crises may led the Pakistan’s Economy. To reduce the
power crises must have to use the renewable power generation sources and implement the above
mentioned solutions.

RECOMMENDATIONS:
 In order to overcome Pakistan's energy concerns for industrial expansion, solar and hydro
energy resources can be employed. 

 The annual budget scheme should prioritize Pakistan's industrial development and electricity
production.

 Through government backing, both domestic and international investors should be encouraged
to invest in power generating in Pakistan.

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The End