Events

Pakistan is facing a severe economic crisis that is linked to the turmoil in its energy sector, particularly in the power industry. The government is struggling to curb the ever growing circular debt which stands at a staggering 2.3 trillion rupees and is adversely affecting all the stakeholders in the energy sector. This debt owes its existence to the government’s inability to recover all the costs of power production. The gap between this cost and the money received from power consumers continues to accumulate every month even when power prices are being raised frequently and fuel adjustment charges are included in electricity bills routinely. This costly electricity, in turn, is one of the main reasons why industrial sector in Pakistan is experiencing a serious decline.

The other major problem in the power sector is that, since 2013, Pakistan has installed far more power plants than it needs, leaving a lot of power capacity unutilized. The thermal power producers, however, still get huge amounts of money in so called capacity payments, regardless of whether their plants are run or not. These capacity payments have ballooned to hundreds of billions of rupees in recent years and have become a huge burden both for the electricity consumers and the national exchequer.

Other parts of the energy sector, particularly gas, also have serious economic implications. Indigenous gas, for instance, is used on highly subsidized rates in the residential and fertilizer sectors, hampering its more efficient usages such as for power generation and/or import substituting industry. But as Pakistan’s own gas reserves run out, our reliance on imported RLNG is increasing which is hurting our balance of payment very badly. Overall energy imports, roughly costing two billion dollars each month, almost offset all our monthly earnings from exports.

This certainly is not a comprehensive picture of the energy sector. It, however, warrants serious deliberations about the policy and planning processes that inform that energy sector. As the elected representatives of the people of Pakistan, parliamentarians have a social, moral and constitutional responsibility to take up these issues – not just within the parliament but also at any public forum that can be available to them.