Bigger gains from better power access

No matter how unpalatable the truth is, the government must summon up the courage to come to terms with the numbing reality that nearly a quarter of the country’s population may still be living without being connected to the national power grid. A survey carried out by the World Bank shows just that and more. The cost of unreliable electricity supply to households in Pakistan is drifting out of control. It is also costing households a princely sum of $4.5 billion or 1.7 per cent of annual GDP. The problem can be fixed but not without undertaking serious energy sector reforms to sift out regulatory and institutional distortions in the gas and electricity sectors.

Lack of reliable access to electricity is not Pakistan’s bugbear alone. Hundreds of millions in the world survive on unreliable or inexpensive electricity — a barrier to development in emerging economies. There is growing understanding that both on and off grid solutions are essential for achieving universal access but must be accompanied by the right policies, institutions and supported by sound planning and stringent regulations.

Actual losses are poorly estimated, because it does not take into account the impact of lack of reliable access to electricity on health and education outcomes. The World Bank says in its report that access rates of electricity could be lower than 97.5pc. The implications are therefore harder to ignore. The off-grid population would raise income by $565 million a year. Based on the higher figure, the annual income gain could reach $5.7 billion, according to the survey. This improving the reliability of electricity supply would add to the gains. Both income and expenditure rise appreciably. Uninterrupted power to rural households can yield another $3.9 billion. On the other hand, power outages cause household income loss of 1.6%. Let us not waste any more time.

Published in The Express Tribune, September 24^th, 2018.

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