Pakistan Energy Situation

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Pakistan

Capital:

Islamabad

Region:

Coordinates:

30.0000° N, 70.0000° E

Total Area (km²): It includes a country's total area, including areas under inland bodies of water and some coastal waterways.

796,100

Population: It is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin.

240,485,658 (2023)

Rural Population (% of total population): It refers to people living in rural areas as defined by national statistical offices. It is calculated as the difference between total population and urban population.

62 (2023)

GDP (current US$): It is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

338,368,455,318 (2023)

GDP Per Capita (current US$): It is gross domestic product divided by midyear population

1,407.02 (2023)

Access to Electricity (% of population): It is the percentage of population with access to electricity.

95.00 (2022)

Energy Imports Net (% of energy use): It is estimated as energy use less production, both measured in oil equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.

24.12 (2014)

Fossil Fuel Energy Consumption (% of total): It comprises coal, oil, petroleum, and natural gas products.

61.59 (2014)

Source: World Bank

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Overview

This article gives a short overview of the energy situation in Pakistan. It outlines the main sources of energy and states the main problems for the energy sector regarding micro hydropower, solar energy products and cooking technologies for energy access. Furthermore, the institutional set-up, the policy framework and international programmes regarding energy access are portrayed.

• RAGA
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Energy Sector Overview

The Islamic Republic of Pakistan which became an independent state in 1947 is governed by a federal parliamentary constitution. It is globally the sixth most populous country with a population of approximately 200.000 million people and a comparatively high population growth rate of 1.5%. Pakistan is a semi-industrialized economy with a presentable textile, food processing and agriculture base and a per capita GDP of 1561 USD. According to the World Bank, Pakistan has important strategic endowments and development potentials. Its labour market is the 10^th largest globally and Pakistan is number 67 amongst the global exporters. Yet, there is a large inequality within the society (Gini: 30 as per World Bank) and still 21% of the population lives under the poverty line.

Pakistan’s Energy Mix

The primary energy supply amounts to over 70 million Tonnes of Oil Equivalent (TOE). Oil and gas are by far the dominating sources with a share of 80%. Oil is imported from the Middle East mainly Saudi Arabia, gas from Iran. In addition, Pakistan is consuming Liquefied National Gas (LNG), Liquefied Petroleum Gas (LPG) and coal. Pakistan has currently, 4 power plants with a total capacity of 755 MW; additional 3 are under construction. Nuclear power accounts for around 1.9% of the total installed capacity in Pakistan. Hydropower has a share of 13% whereas other renewable energies only play a minor role.

The government is supporting the use of LPG for cooking resulting in rapid investment in production, storage and establishment of auto stations of LPG. During the FY 2016, an approximate investment of PKR 2.38 billion has been made in the LPG supply infrastructure whereas total investment in the sector until Feb 2016 is estimated at about PKR 22.33 billion. During the FY 2016, the regulatory body OGRA has issued 12 licenses for operational marketing of storage and filling plants, 37 licenses for construction of LPG storage and filling plants, 20 licenses for Construction of LPG auto-refuelling stations and one license for storage and refuelling of LPG was issued. Further, one license for construction of production and storage of LPG facility is also issued by OGRA which shall result in improving supply and distribution of LPG as well as create job opportunities in the sector.

Energy Sources

Historically, Pakistan has always been an energy importer and is highly dependent on fossil fuels. With the rising fossil fuel prices, the cost of oil importing is creating a dent on Pakistan’s foreign exchange reserves. The rising oil price along, withe the rising demand for uninterrupted power, is creating additional pressure on the already fragile electricity grid of Pakistan. Therefore, to met this increasing demand, the Government of Pakistan, in its new budget for the fiscal year 2014-2015,has allocated $340 million to its energy development portfolio. About 80% of this budget will be spent on generating power from solar, biomass and biogas.

About USD 2.3 billion is spend annually on candles, kerosene lamps and battery-powered flashlights by Pakistanis.

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Renewable Energy Sources

Pakistan aims at achieving 5-6% of its total on-grid electricity supply from renewables (excluding large hydropower) by 2030. Total installed power capacity stood at 26 GW at year-end 2016, of which 4.2 % was renewable energy.

Pakistan is blessed with a high potential of renewable energy resources, but so far, only large hydroelectric projects and few wind and solar projects have harnessed this potential. Renewable Energy accounts for 1136 MW presently installed capacity of solar PV, wind and biomass based power projects. Possibilities also exist in promoting greater use of wind, solar and biomass project.

Previously Government of Pakistan (GoP) had announced various policies and enabling environments such as feed-in tariff/upfront tariff, tax incentives, net metering, long term refinancing facility and micro-financing schemes for promoting corporate sector investment in the renewable energy (RE) sector. Taking the market growth, technological developments, recent cost reductions and new financial mechanisms into account, the GoP decided to liberate the market and instigate more competition amongst the private sector players for delivering electricity from RE resources (i.e. wind/solar) at optimal tariff rates. Accordingly, the GoP introduced tenders to call for competitive/reverse bidding for the RE power projects and the first phase of bidding for wind power projects has been initiated.

1. For wind power project, the regulator recently has announced a benchmark levelized tariff as:
   - for 100% foreign financing US cents 6.7467/kWh
   - on 100% local financing,  US cents 7.7342/kWh.
   
2. For solar power projects there is no benchmark tariff announced by the regulator as yet, however the last upfront tariff is provided below.
   

Figure 1: Revised tariffs for solar projects in 2016

Wind Energy

Pakistan has a potential for wind energy specially in the southern coast and coastal Balochistan. The wind speed is on average 7-8 m/s at some sites along the Keti Bandar- Gharo corridor.

Particularly in the southern regions of Sindh and Balochistan, the technical potential of wind power is high along the 1,000 km of coastline where wind speeds range between 5 and 7 m/s. The potential capacity for wind energy is estimated at 122.6 GW per year, more than double of the country’s current power generation level. A newly completed wind farm in Gharo, Sindh Province, is one of a series under construction in Pakistan to reduce the country's serious energy deficit.

For more information about wind energy in pakistan, see Wind Energy Country Analyses Pakistan

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Solar PV

The solar potential is estimated to be over 100,000 MW. Pakistan has a high solar potential. Irradiation across the country is around 4.5-7.0 kWh/m²/day.

Figure 2: Direct solar radiation in Pakistan.

• Solar Village Electrification: More than 40,000 villages which are so far from the grid that it becomes costly and uneconomic to extend the grid to these locations are prime candidates for village electrification using Solar Home Systems (SHS).
  
• Solar Water Heaters and Geothermal Heat Pumps: There is a big market for investors for SWH and GHP in domestic and industrial sectors. Only 22% of the population has access to piped natural gas.
• Productive use in agriculture: Solar Powered Efficient Pumps could replace the 260,000 water pumps (tube -wells) with a sanctioned load of over 2,500 MW operated with electricity, and another 850,000 Diesel Water Pumps that consume 72,000 TOE of Diesel annually.
• Street Lights: Pakistan has over 500,000 Street Lights with a sanctioned load of over 400 MW. Most of these Street Lights are based on 80W, 125W and 250W Sodium Lights. They offer opportunities to be replaced with Efficient Solar Lighting.

Biomass

Out of the total area of 79.6 million hectares, 21.2 million hectares are cultivated; Almost 80 percent of the cultivated area is irrigated. The country has the world’s largest contiguous irrigation system. Forests cover 4.21 million hectares, 5% of Pakistan’s total area. According to the FAO data, this number has dropped continuously since the 1990s to only 1.9% in 2015.

“Biomass availability in Pakistan is also widespread. Approximately 50,000 tonnes of solid waste, 225,000 tonnes of crop residue and over 1 million tonnes of animal manure are produced daily. It is estimated that potential production of biogas from livestock residues is 8.8 to 17.2 billion meters³ of gas per year (equivalent to 55 to 106 TWh of energy). Large sugar industry in Pakistan also generates electricity from biomass energy for utilization in sugar mills. Annual electricity production from bagasse is estimated at 5,700 GWh – about 6% of Pakistan’s current power generation level. In the present electricity crisis recently government allowed sugar mills to supply their surplus power up to a limit of 700 MW to the national grid. It is estimated that sugarcane bagasse can potentially be used to generate 2000 MW of electric power. However presently it is difficult to obtain more electricity from sugar mills due to grid limitations because most of the sugar mills are located in remote rural areas which are not even connected to the national grid. Integration of electricity generated from biomass energy to the national grid can ease the electricity shortage in the country.” A large number of people in rural areas in Pakistan depend on forests for their livelihood, fuelwood and shelter. Many use the forests in unsustainable ways to satisfy their domestic energy needs. Therefore, forest depletion and degradation are a major challenge.

Almost all of Pakistan’s Biomass power generation is done in steam power plants, since biomass gasification and newest fermentation technology has not been introduced in the country. The Sugar industry has the highest utilization of biomass, with every singly sugar mill being equipped with a biomass boiler for the production of electricity. Some even incorporate high pressure boilers to increase efficiencies. The “Framework for Power Co-generation’ for bagasse and biomass-based sugar industry projects”, introduced in 2013, is expected to attract 1,500 MW to 2,000 MW in generation in the short term, between 2016 and 2018.

 

Hydropower

Large Hydropower has proved to be the cheapest source of electricity. Despite the high availability of hydro power resources low investments in this sector hamper the utilization of this potential source.

Smaller (less than 50 MW) sites are available throughout the country. The micro - hydropower sector has been relatively well established yet. Since the mid-80s micro-hydro power plants supply electricity to some 40,000 rural families. Most of the plants are community-based and situated in the Northern Areas and Chitral. Small Hydropower is considered as another promising option for off-grid generation of electricity. Provincial governments mainly handled the small hydropower sector: in 2014, 128 MW has been operational in the country, 877 MW is under installation and around 1500 MW is available for further development. The potential for micro hydro (up to 100 kW) is estimated at 350 MW in Punjab and 300 MW in northern Pakistan.

Main Problems of the Energy Sector

According to the World Energy Outlook (2016) statistics, at least 51 million people in Pakistan or representing 27% of the population live without access to electricity. According to IFC, the rate of energy for poor people is even higher with approximately 36% or 67 million out of 185 million without access to electricity. The National Electric Power Regulatory Authority, in its annual State of the Industry Report, concludes that approximately 20% of all villages, 32,889 out of 161,969, are not connected to the grid. Even those households that are statistically connected experience daily blackouts so that it is estimated that more than 144 million people across the country do not have reliable access to electricity. As a result, Pakistani households use a mix of technologies to power their homes and businesses.

More than 50 % of the population, mainly in rural Pakistan, relies on traditional biomass for cooking. Common cooking fuels include firewood, agricultural waste and dung cakes. According to a study about Balochistan and Sindh region in April 2007, it was appraised that households use on average 920 kg of wood in winter and 560 kg of wood in summer while in Sindh the numbers are 640 kg and 400 kg respectively. In Balochistan, around half of the population collects their own firewood, while in Sindh most households need to buy their wood. The burning of biomass in inefficient stoves and without proper venting or air exhaust causes serious health problems. According to WHO estimates indoor air pollution is responsible for more than 50,000 premature death per year in Pakistan. Especially women and children are affected as they are most exposed to the smoke and soot from cooking. In addition the burning of wood is contributing to deforestation which is progressing at a rate of more than 2% per year.

A survey revealed that rural households in Punjab spent on average about 9 % of the total household income for fuel and lighting. However, poor households are forced to invest up to 25% of their monthly income in fuel, kerosene and batteries due to the dysfunctional market. In general, non-electrified households spend USD 5 to USD 8 per month or an estimated USD 2.3 billion a year on everything from candles, to kerosene lamps, to battery-powered torches.

Due to poor distribution networks, households in rural areas using LPG as fuel pay up to 10 times more than urban households that benefit from subsidised natural gas for residential use.

Access to electricity is varying from more than 90 % electrified households in urban areas down to only 61% in remote rural area.
Figure 3: Average Monthly Fuel and Lighting Expenditure in Rural Punjab, by income level. 

The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.”

The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.” The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.”

Figure 4: Electricity access in Pakistan, 2016 and Traditional use of biomass for cooking - 2014.

Population without electricity	National electrification rate	Urban electrification rate	Rural electrification rate	Population relying on traditional use of biomass	Percentage of population relying on traditional use of biomass
51 million	73%	90%	61%	105 million	56%

The demand for electricity in Pakistan has increased dramatically within the last 5 years. Over half of this demand originates from the Punjab province where the majority of the population resides. Households are mainly responsible the increase of demand. The high demand of industry and local entrepreneurs in turn cannot be met either. The recent rise in demand is, in part, due to the large-scale instalment of cooling and air-conditioning systems, particularly in urban areas. As a result, the demand is especially high in the summer months. In the Punjab electricity demand often exceeds the available supply by 2 to 3 GW, which makes up around 30% of the total installed capacity. Therefore, many businesses and industries, as well as private households, have resorted to installing diesel generators as back-up which has led to a substantial increase in the cost of electricity in cities across Pakistan. The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.”

Overall Pakistan is struggling with a large gap between electricity supply and a demand of about 5 GW. Main reasons for low investments in power generation are tariffs below cost recovery levels, power theft, insufficient collection rates, and technical losses of around 23-25%. As a result, power generation companies face serious financial problems, making investments in the sector very difficult. In addition, costs of power generation, which is mainly based on fossil fuels, are very high averaging at around 12PKR/kWh and up to 15PKP/kWh if technical losses are included. The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.” Due to high costs, the government subsidises electricity tariffs, in order to make them more affordable for consumers. In 2013, government subsidies for electricity reached 1.3 billion USD, however, this did not recover the costs of generation, transition and distribution. “This creates a budget gap that curtails public investment in primary infrastructures, essential for the economic development of the country.” The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.”

The growth of power generation capacities is slow. The declining availability of natural gas in Pakistan often results that existing power plants operating below capacity. Gas has increasingly to be substituted with oil, which is mainly imported (75%). Nevertheless, the country’s reliance on its internal natural gas resources has even increased in the last years, mainly due to rising international oil prices which in turn has led to increase in cost of businesses, pressure on household budgets, especially of lower middle income groups and burden on national exchequer in terms of subsidies. The main factors which are preventing the rollout of rural electrification are the increasingly high distribution costs and the shortage of power generation which results in breakouts as well as load shedding. Furthermore, due to the currently very low electricity consumption/demand in rural areas the expansion of the grid into these areas is merely not economical and hence not feasible. Utilities and distribution companies are reluctant to roll out the grid since the “revenues from tariffs would never be able to provide the returns needed to recover the investment.”

As a result of the insufficient power supply, the unused capacities, and the power losses, Pakistan is facing serious power blackouts on average 10-12 hours a day. The substantial load shedding affects enterprises, social institutions and even individual households, and thus hampers considerably the economic and social development of the country.

Policymakers neglect in energy planning and energy policies non-commercial/traditional energy sources which are not even represented in national statistics (only electricity and mining). This means that almost 50 % of the consumers which are mainly rural households are ignored in energy planning and the public investments for supply of power.

Moreover, Pakistanis also among the Top 10+1 countries with largest number of people using solid fuels for cooking as shown below in graph.

Figure 5: Number of people using solid biomass for cooking. According to the International Energy Agency, in 2011, Pakistan’s population will rise to over 100 million people by 2030, with Pakistan rising from among the top 10 to being among top 5 countries with the highest proportion of population without access to modern energy.

Institutional Set-Up in the Energy Sector

Electricity sector

The electricity market of Pakistan in unbundled at the generation and distribution but is bundled at the Transmission point. The National Transmission and Dispatch Company (NTDC) is only responsible for transmission and dispatch of electricity. As of December 2006, there are 16 IPPs investing in Pakistan.

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Further Information

• Country portal on energypedia

References

This article is mainly based on a paper written for the GIZ Pakistan (Energy access situation in Pakistan. Energy sector overview of micro hydropower, solar and cooking technologies, January 2016)