Pakistan’s economic development and prosperity depend on how successfully
the country ensures abundant supply of reliable and affordable energy. If the energy
problem is not tackled effectively, the population’s sufferings will increase
By M. Osman Ghani
Since ancient times use of energy has served as an integral part of human life and their prosperity. As population was increasing, the demand for energy was also expanding. It was the discovery of electricity and extensive use of fossil fuel that led to the industrial revolution and that steered advancement of science and technology, culminating in enhanced level of socio-economic prosperity, better living conditions, better health and human happiness. The role of energy still remains as a vital ingredient for rapid socio-economic development. The per capita consumption of energy indicates socio-economic prosperity of any country. It is also a criterion to distinguish between an advanced and a poor country. Any nation willing to pursue rapid socio-economic advancement must assign priority to the development of this vital factor.
Energy development, broadly meaning increased provision and use of energy services, is an essential part of enhanced economic development. Advanced industrialised societies use more energy per unit of economic output and far more energy per capita than poorer societies, especially those still in the pre industrial state. Energy use per unit of output does seem to decline over time in the more advanced stages of industrialisation, reflecting the adoption of increasingly more efficient technologies for energy production and utilisation, as well as changes in the composition of economic activity. And energy intensity in today’s developing countries probably peaks sooner and at a lower level along the development path than was the case during the industrialisation of the developed world. But even with trends toward greater energy efficiency and other dampening factors, total energy use and energy use per capita continue to grow in the advanced industrialised countries, and even more rapid growth can be expected in some developing countries as their incomes advance. The fact that expanded provision and use of energy services is strongly associated with economic development leaves open how important energy is a casual factor in economic development. Development involves a number of other steps besides those associated with energy, notably including the evolution of education and labour markets, financial institutions to support capital investment, modernisation of agriculture, and provision of infrastructure for water, sanitation, and communication. This is not just an academic question; energy development competes with other development opportunities in the distribution of scarce capital, and in the allocation of scarce opportunities for policy and institutional reform.
Energy use increases as more economic sectors develop and more channels for flows are opened. Economic diversity, as measured by the number of economic sectors using energy and the equitability of flows between them, generally increases. As diversity increases the efficiency of generating output with a given amount of energy also increases. Development capacity, the product of system energy throughput the diversity of flows, is a measure of the potential system output and is calculated for selected countries. Capacity changes overtime are shown to relate to changes in economic output in selected countries. Two distinct development strategies become evident, one which promotes energy use and the other which emphasises diversity and the sustainability of each.
Sustainable human development is people-centred development. It generates economic growth and equitably distributes the fruits of that growth. It empowers people, expands their choices and opportunities, and involves them in decisions that shape their lives. For the United Nation Development Programme (UNDP), sustainable human development means focusing resources on four key areas; eradicating poverty, increasing women’s role in development, providing people with income-earning opportunities, and protecting and regenerating the environment. Initiatives in the energy sector are an important means to achieve sustainable human development. After all, as countries develop, their energy needs evolve and expand. And, the production and consumption of energy has a tremendous impact on economies, environments and industrial development. Energy should, therefore, be taken into account in any development strategy.
Due to acute shortage of electricity and other forms of energy, and their rising prices, Pakistan has been experiencing a slowdown in its economic activities. Major negative impact is being experienced by its industrial sector and international trade. Energy availability in Pakistan in all its form has declined or at least remained stagnant during 2008-09, and due to the ever increasing demand, the energy situation may deteriorate in the current fiscal year. Like previous years, the major sectors affected will be the manufacturing sector and exports. It should be noted that Pakistan’s exports during July-December 2009 declined by 3.2 per cent, while India’s grew by 9.3 per cent in December 2009. Poor power supply, along with the circular debt burden has been singled out as one of the prime reasons for dismal performance of the manufacturing and agriculture sectors. The future economic development and human prosperity of Pakistan squarely depends on how successfully it ensures the abundant supply of reliable and affordable energy. If Pakistan fails to tackle its energy problem effectively, then its population’s sufferings will increase.
The impact of power shortage is quite visible not only in the form of slowdown in economic growth, but in the form of severe suffering of the people. Moreover, continuous increase in petroleum, oil and lubricant (POL) products and utility charges are only adding to their suffering. Increase in energy prices is immediately reflected on higher transportation costs and price hike of essential consumer items. On the other hand, to fill up the revenue gap and to meet the conditionality of major donors, the government is sometimes compelled to increase the utility charges.
The question that the people of Pakistan generally ask is, how long will they have to wait to see the nation prosper, especially when, in our corruption-prone society the gap between the have and have not is widening day by day, and when the number of people living below the poverty line is also dangerously increasing? Economic stagnation and the rising poverty level, however, can be effectively addressed by rapidly improving the dilapidated infrastructure system, energy availability and human indicators. We have repeatedly heard optimistic news such as the country having the largest coal reserves, and that it can meet its energy demand for more than a thousand years. It has hydro potential of 40,000 MW, mostly unutilised; it has huge potential of renewable energy, including at least 20,000 MW wind power etc. The time is just right to do something about this. Because of resource constraints and other problems, we cannot do everything that we need or want to do. But, we can start with a few projects that will take less time and would be easy to accomplish. One such project is to exploit the huge coal reserves of Thar, with the cooperation of some friendly countries like China. Pakistan and China enjoy exemplary friendly ties, which have not only sustained but, in fact, have expanded becoming deeper and deeper. Pakistan, being its closest friend may ask China to cooperate in the rapid and comprehensive development of Thar Coal for adequate power generation. Coal supplied the vast majority (70 per cent) of China’s total energy consumption requirement. Over the time, China has gained the required experience and expertise for hazard-free production of coal electricity, and Pakistan can benefit from its expertise and help. It may be noted that China was interested in various energy sector development projects in Pakistan including the following:
(1) Collaboration in exploiting the Thar coal and its use for power generation.
(2) Proposal for setting up an oil refinery in Gwadar, along with oil storage and patro-chemical complex.
(3) Proposal for setting up an oil pipeline from Gwadar to Kashgar.
(4) Examining the feasibility of installing additional nuclear power plants in Pakistan etc.
It is estimated that coal consumption of the entire world will increase by 49 per cent from 2006 to 2030, and coal’s share in world energy consumption will increase from 27 per cent in 2006 to 28 per cent in 2030. Of the coal produced worldwide in 2006, 62 per cent was shipped to electricity producers, 34 per cent to industrial consumers, and most of the remaining 4 per cent to coal consumers in the residential and commercial sectors. In the electric power sector its share may decline slightly, from 42 per cent in 2006 to 40 per cent in 2020, and then increase to 42 per cent in 2030. Pakistan, being an energy deficient country can no longer neglect this precious gift of God in the form of Thar coal