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A stark report, with dire warnings. Is anybody listening?
Powerless in Pakistan | Foreign Policy
THE SOUTH ASIA CHANNEL
Powerless in Pakistan
An unending energy crisis could soon bring catastrophic consequences. Here’s what needs to be done before it’s too late.
BY MICHAEL KUGELMAN JUNE 30, 2015
Last week, Pakistan was hit by a heat wave of highly tragic proportions.
The country has suffered through deadly hot spells in the past, but the lethality of this latest one was astounding. According to Pakistani officials, high temperatures killed more than 1,200 people — most of them in Karachi — over a one-week period. The true figure could be much higher, given the likelihood of unreported deaths.
In effect, this heat wave killed more than twice as many people in a matter of days as terrorism has over the entire year (as of late June, about 530 Pakistani civilians had died in terrorist attacks in 2015).
This crisis was exacerbated by rampant power outages. Many households had little electricity to operate fans or air conditioning units; in Karachi, some complained of having no power for more than 12 hours per day. While the rich ran emergency generators, the less fortunate faced stifling conditions that hastened heatstroke and, often enough, death. One woman in Karachi became sick and later died after suffering in an electricity-deprived home that her son described as “like a baking oven.” Power cuts even denied dignity to those killed by the heat wave. CNN’s Saima Mohsin reported that one charity-run morgue had no electricity to keep bodies cool, resulting in an overpowering “stench of death.”
Sadly, such energy woes aren’t surprising.
Deep and Destabilizing
Pakistan has been convulsed by power outages for years. Electricity deficits on any given day may range from 4,500 to 5,000 megawatts (MW), though they’ve sometimes soared to 8,500 MW — more than 40 percent of national demand. These figures are somewhat comparable to those of India (which has experienced shortfalls between 3,000 and 7,500 MW over the last year or so). Many other countries in the developing world, particularly in Africa, also experience power shortfalls of varying levels. Developed countries experience deficits less frequently, though they sometimes face localized modest shortages (for example, in February 2011, power plant breakdowns caused deficits in Texas).
Pakistan’s supply shortages, however, merely represent the tip of an immense iceberg.
As I argue in Pakistan’s Interminable Energy Crisis, a new Wilson Center report, Pakistan’s energy problems are rooted more in shortages of governance than of supply. The energy sector suffers from transmission and distribution (T&D) losses that have exceeded 30 percent, as well as from several billion dollars of debt. The losses are caused by bad equipment, poor maintenance, and energy theft. The debt — often described as “circular” in nature — is a consequence of cash flow problems. Energy generators, distributors, and transmitters lack funds. This is due in part to a flawed pricing policy: The Pakistani government charges a pittance for energy, and yet few customers pay their bills. As a result, revenue is scarce, and the sector literally cannot afford to provide energy.
Pakistan’s energy crisis has troubling implications for its fragile economy and volatile security situation. In recent years, power shortages have cost the country up to 4 percent of GDP. Hundreds of factories (including many in the industrial hub city of Faisalabad alone) have been forced to close. Some Western companies, citing electricity deficits, have suspended operations in Pakistan. In January, the Moody’s ratings group warned that energy shortages will damage Pakistan’s credit worthiness.
Meanwhile, militants are happy to exploit Pakistan’s energy insecurity. Over the last four years, separatists in the insurgency-riven province of Balochistan have targeted more than 100 gas lines. Back in April 2013, the Pakistani Taliban blew up the largest power station in Khyber-Pakhtunkhwa province. Half of Peshawar, the provincial capital with a population nearly as large as Los Angeles, lost power. And just last week, the Pakistani Taliban tapped into widespread anger at Karachi’s main electricity utility, K-Electric, by threatening to attack the facility if it did not restore power.
Wide expanses of Pakistan’s population are affected by the energy crisis. Shortages prevent people from working, cooking, and receiving proper medical care (in some hospitals, services have been curtailed). Not surprisingly, public opinion polls in Pakistan identify electricity shortages as one of the country’s top problems.
In sum, the energy crisis threatens Pakistan’s economy and its precarious security situation, while also deleteriously affecting the lives of everyday residents across the board. Something needs to be done, and fast.
Sustainable Solutions, Not Short-Term Fixes
Pakistan’s Interminable Energy Crisis offers nearly 20 recommendations to ease the crisis in a meaningful and lasting way. It calls above all for a new way of thinking about energy — one that emphasizes more judicious use of existing resources. This means aggressively reducing T&D losses; better enforcing laws against energy theft; developing robust maintenance regimes to ensure that energy infrastructure does not fall into disrepair; and establishing incentives for consumers to use less energy. Achieving these objectives would drastically enhance energy security. Our report estimates that Pakistan’s energy savings potential is about 2,250 MW — roughly half of its total power shortfall.
We also urge officials to pursue a more affordable energy mix. This will require less focus on expensive imports and more focus on indigenous reserves. Pakistan should embrace domestic coal, though within reason; technological and infrastructural constraints preclude heavy exploitation. It should pursue indigenous natural gas alternatives such as tight and shale gas; current reserves are estimated to be quadruple those of conventional natural gas. Pakistan should take advantage of falling solar and wind power costs to increase the proportion of renewables in its energy mix. It can make its mix even greener by adapting other cleaner fuels, such as coal briquettes — which are cleaner than ordinary coal when burned.
Additionally, we recommend more effective energy market policies. Pakistan’s government should scale back its involvement in the energy sector and encourage privatization — but not necessarily full-scale privatization. While electricity generation companies should be fully privatized, it may be prudent for distribution companies — which tend to be larger and employ more people than generation companies — to be restructured through the use of franchising, which transfers operational responsibilities to private actors while the government maintains ownership over assets. Pakistan should also aim to attract a more geographically diverse set of foreign investors. Its aggressive courtship of Chinese companies has made some energy investors from other countries fear the lack of a level playing field.
Finally, we call for institutional reform: Pakistan should bring more coordination and order to a dysfunctional and chaotic energy sector. This means establishing a new energy ministry with overarching responsibility, and with full access to top policy levels; streamlining institutional decision-making processes so that policies no longer need so many approvals (more than 15 government entities are currently involved in energy policy); and integrating energy subsector plans and policies to support national goals. For Pakistan to ease its energy crisis, it needs more effective energy policies — but energy policies can only be as effective as the institutions that shape them.
Costs of Inaction
These are admittedly ambitious proposals, and Pakistan’s risk-averse politicians may wish to have nothing to do with them. That, however, would be a big mistake. Because as bad as things are now, Pakistan’s Interminable Energy Crisis warns, they could soon get much worse.
Pakistan is in the midst of rapid urbanization — a major societal shift that could worsen the effects of energy problems in the years ahead. Demand for electricity is particularly high in cities, because urban industries and homes tend to be more dependent than those in the hinterland on grid-connected energy sources. With droves of Pakistanis entering cities and becoming dependent on grids, supply pressures will deepen exponentially.
And with demand for energy rising dramatically in the coming years, Pakistan could face unprecedented shortages.
Our report concludes that during a period stretching from 2014 into 2015, peak demand was 20,800 MW. This figure is expected to rise to nearly 32,000 MW by 2019. In effect, in just four years, demand could exceed, by nearly 10,000 MW, Pakistan’s current installed capacity of 23,000 MW. To address this gap, Pakistan may need to install as much electrical capacity in the current decade as it did over the last 60 years.
Ultimately, if Pakistan does not move with alacrity to address its energy woes, the challenges that the crisis presents today will seem tame compared to what could be in store in the years ahead.
This means, among other things, that when heat waves strike Pakistan in the future, power outages could be even more lengthy and widespread than they are today.
And, tragically, many people — perhaps even more than the staggering 1,200-in-a-week that perished this time around — would likely die as a result.
Powerless in Pakistan | Foreign Policy
THE SOUTH ASIA CHANNEL
Powerless in Pakistan
An unending energy crisis could soon bring catastrophic consequences. Here’s what needs to be done before it’s too late.
BY MICHAEL KUGELMAN JUNE 30, 2015
Last week, Pakistan was hit by a heat wave of highly tragic proportions.
The country has suffered through deadly hot spells in the past, but the lethality of this latest one was astounding. According to Pakistani officials, high temperatures killed more than 1,200 people — most of them in Karachi — over a one-week period. The true figure could be much higher, given the likelihood of unreported deaths.
In effect, this heat wave killed more than twice as many people in a matter of days as terrorism has over the entire year (as of late June, about 530 Pakistani civilians had died in terrorist attacks in 2015).
This crisis was exacerbated by rampant power outages. Many households had little electricity to operate fans or air conditioning units; in Karachi, some complained of having no power for more than 12 hours per day. While the rich ran emergency generators, the less fortunate faced stifling conditions that hastened heatstroke and, often enough, death. One woman in Karachi became sick and later died after suffering in an electricity-deprived home that her son described as “like a baking oven.” Power cuts even denied dignity to those killed by the heat wave. CNN’s Saima Mohsin reported that one charity-run morgue had no electricity to keep bodies cool, resulting in an overpowering “stench of death.”
Sadly, such energy woes aren’t surprising.
Deep and Destabilizing
Pakistan has been convulsed by power outages for years. Electricity deficits on any given day may range from 4,500 to 5,000 megawatts (MW), though they’ve sometimes soared to 8,500 MW — more than 40 percent of national demand. These figures are somewhat comparable to those of India (which has experienced shortfalls between 3,000 and 7,500 MW over the last year or so). Many other countries in the developing world, particularly in Africa, also experience power shortfalls of varying levels. Developed countries experience deficits less frequently, though they sometimes face localized modest shortages (for example, in February 2011, power plant breakdowns caused deficits in Texas).
Pakistan’s supply shortages, however, merely represent the tip of an immense iceberg.
As I argue in Pakistan’s Interminable Energy Crisis, a new Wilson Center report, Pakistan’s energy problems are rooted more in shortages of governance than of supply. The energy sector suffers from transmission and distribution (T&D) losses that have exceeded 30 percent, as well as from several billion dollars of debt. The losses are caused by bad equipment, poor maintenance, and energy theft. The debt — often described as “circular” in nature — is a consequence of cash flow problems. Energy generators, distributors, and transmitters lack funds. This is due in part to a flawed pricing policy: The Pakistani government charges a pittance for energy, and yet few customers pay their bills. As a result, revenue is scarce, and the sector literally cannot afford to provide energy.
Pakistan’s energy crisis has troubling implications for its fragile economy and volatile security situation. In recent years, power shortages have cost the country up to 4 percent of GDP. Hundreds of factories (including many in the industrial hub city of Faisalabad alone) have been forced to close. Some Western companies, citing electricity deficits, have suspended operations in Pakistan. In January, the Moody’s ratings group warned that energy shortages will damage Pakistan’s credit worthiness.
Meanwhile, militants are happy to exploit Pakistan’s energy insecurity. Over the last four years, separatists in the insurgency-riven province of Balochistan have targeted more than 100 gas lines. Back in April 2013, the Pakistani Taliban blew up the largest power station in Khyber-Pakhtunkhwa province. Half of Peshawar, the provincial capital with a population nearly as large as Los Angeles, lost power. And just last week, the Pakistani Taliban tapped into widespread anger at Karachi’s main electricity utility, K-Electric, by threatening to attack the facility if it did not restore power.
Wide expanses of Pakistan’s population are affected by the energy crisis. Shortages prevent people from working, cooking, and receiving proper medical care (in some hospitals, services have been curtailed). Not surprisingly, public opinion polls in Pakistan identify electricity shortages as one of the country’s top problems.
In sum, the energy crisis threatens Pakistan’s economy and its precarious security situation, while also deleteriously affecting the lives of everyday residents across the board. Something needs to be done, and fast.
Sustainable Solutions, Not Short-Term Fixes
Pakistan’s Interminable Energy Crisis offers nearly 20 recommendations to ease the crisis in a meaningful and lasting way. It calls above all for a new way of thinking about energy — one that emphasizes more judicious use of existing resources. This means aggressively reducing T&D losses; better enforcing laws against energy theft; developing robust maintenance regimes to ensure that energy infrastructure does not fall into disrepair; and establishing incentives for consumers to use less energy. Achieving these objectives would drastically enhance energy security. Our report estimates that Pakistan’s energy savings potential is about 2,250 MW — roughly half of its total power shortfall.
We also urge officials to pursue a more affordable energy mix. This will require less focus on expensive imports and more focus on indigenous reserves. Pakistan should embrace domestic coal, though within reason; technological and infrastructural constraints preclude heavy exploitation. It should pursue indigenous natural gas alternatives such as tight and shale gas; current reserves are estimated to be quadruple those of conventional natural gas. Pakistan should take advantage of falling solar and wind power costs to increase the proportion of renewables in its energy mix. It can make its mix even greener by adapting other cleaner fuels, such as coal briquettes — which are cleaner than ordinary coal when burned.
Additionally, we recommend more effective energy market policies. Pakistan’s government should scale back its involvement in the energy sector and encourage privatization — but not necessarily full-scale privatization. While electricity generation companies should be fully privatized, it may be prudent for distribution companies — which tend to be larger and employ more people than generation companies — to be restructured through the use of franchising, which transfers operational responsibilities to private actors while the government maintains ownership over assets. Pakistan should also aim to attract a more geographically diverse set of foreign investors. Its aggressive courtship of Chinese companies has made some energy investors from other countries fear the lack of a level playing field.
Finally, we call for institutional reform: Pakistan should bring more coordination and order to a dysfunctional and chaotic energy sector. This means establishing a new energy ministry with overarching responsibility, and with full access to top policy levels; streamlining institutional decision-making processes so that policies no longer need so many approvals (more than 15 government entities are currently involved in energy policy); and integrating energy subsector plans and policies to support national goals. For Pakistan to ease its energy crisis, it needs more effective energy policies — but energy policies can only be as effective as the institutions that shape them.
Costs of Inaction
These are admittedly ambitious proposals, and Pakistan’s risk-averse politicians may wish to have nothing to do with them. That, however, would be a big mistake. Because as bad as things are now, Pakistan’s Interminable Energy Crisis warns, they could soon get much worse.
Pakistan is in the midst of rapid urbanization — a major societal shift that could worsen the effects of energy problems in the years ahead. Demand for electricity is particularly high in cities, because urban industries and homes tend to be more dependent than those in the hinterland on grid-connected energy sources. With droves of Pakistanis entering cities and becoming dependent on grids, supply pressures will deepen exponentially.
And with demand for energy rising dramatically in the coming years, Pakistan could face unprecedented shortages.
Our report concludes that during a period stretching from 2014 into 2015, peak demand was 20,800 MW. This figure is expected to rise to nearly 32,000 MW by 2019. In effect, in just four years, demand could exceed, by nearly 10,000 MW, Pakistan’s current installed capacity of 23,000 MW. To address this gap, Pakistan may need to install as much electrical capacity in the current decade as it did over the last 60 years.
Ultimately, if Pakistan does not move with alacrity to address its energy woes, the challenges that the crisis presents today will seem tame compared to what could be in store in the years ahead.
This means, among other things, that when heat waves strike Pakistan in the future, power outages could be even more lengthy and widespread than they are today.
And, tragically, many people — perhaps even more than the staggering 1,200-in-a-week that perished this time around — would likely die as a result.
