‘Electrocuted’ Economy: KPPCI report cites power outages for losses, job-cuts in K-P

Operational performance of existing power plants severally affected, causing frequent break downs.

Riaz Ahmad August 11, 2012


Pakistan’s energy crisis feeds on a host of issues. An unsustainable energy mix, failure to exploit coal and nuclear energy, low efficiency of existing power plants, circular debt and poor revenue recovery are but some of these issues.

A recent report published by the Khyber- Pakhtunkhwa Chamber of Commerce and Industry (KPCCI) titled ‘Economic Stagnation of Khyber-Pakhtunkhwa’ compiles research dealing with the energy crisis and the issues it is intertwined with.

According to the report, load-shedding from eight to 16 hours a day during 2008-11 is affecting economic activities and future investment prospects in the province.

The total cost of industrial load-shedding to the economy was estimated at Rs336 billion in 2010-11 as compared to Rs210 billion in the year 2008-9. A loss of 760,000 jobs in 2010-11 was witnessed besides a Rs120 billion loss to exports.

The study says Pakistan’s energy mix for power generation has increasingly become unsustainable over the years. The country has failed to develop coal and nuclear energy as sources for power generation. The two nuclear plants in the country were only contributing 787MW to the national grid in 2010-11.

The worldwide share of coal as a source for power generation stood at 40 per cent, as opposed to 52.2 per cent in India, and 0.3 per cent in Pakistan. The use of gas for power generation in the world was accounted as 19 per cent, against 10.9 per cent in India and 35.7 per cent in Pakistan.

The share of oil for power generation was 17 per cent in the world, 0.8 per cent in India and 28.7 per cent in Pakistan. The share of hydel generation in total power production in the world stands at 16 per cent; it stands at 33 per cent in Pakistan, compared to 24 per cent in India.

Circular debt was another major issue outlined by the report. The Rs400 billion debt has its roots in 2008, when the government did not increase fuel prices in the country after worldwide prices jumped to $147 per barrel. Various organisations in the sector have up to Rs258 billion stuck in inter-corporate debts.

Recovery of outstanding bills is another dilemma and many attempts in the past have not yielded results. The collection ratio stands at only 67.63 per cent for Pesco, Hesco and Qesco combined, compared to 95.31 per cent for Lesco, Fesco, Gepco, Mepco and Iesco.

Due to various technical reasons relating to maintenance, the operational performance of existing power plants, particularly in the public sector, and their capability to supply power has been severally affected, causing frequent break downs.

Published in The Express Tribune, August 11th, 2012.

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