An Overview of the Energy
Sector of Pakistan
Dr. Waqar Khalid (Ph.D. Economics)
Assistant Professor
U.S.-Pakistan Center for Advanced Studies in Energy
(USPCAS-E)
National University of Sciences and Technology 1
(NUST)
Energy & Its Importance:
Energy plays a crucial role in the economic growth and development
of world economies, and Pakistan is no exception.
For economic and technological growth, the availability of sufficient
energy is a necessity.
Worldwide energy consumption is rising due to modernization,
urbanization, population growth, and economic development.
The importance of energy has further increased due to the global oil
crisis experienced in 1973 and 1979 as well as the mini oil shocks
experienced in the 1990s and 2000s.
Since energy has become the pivotal production input for the
production process, it further boosts the efficiency and productivity of
an economy.
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Economic growth models primarily placed emphasis on two
input factors (labour & capital) in production functions.
Energy has not given an explicit role in the standard economic
growth theories.
Due to globalization, industrialization, energy use patterns,
population growth, development activities, and the frequent
global oil price shocks since the 1970s, energy has received
noteworthy consideration from economists, policymakers, and
researchers worldwide.
For example, numerous studies have shown casual
relationships between economic growth and energy
consumption.
There is no final consensus among researchers about the
direction of causality between energy consumption and
economic growth.
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Energy Profile of Pakistan:
Hydropower
Pakistan has experienced a life-threatening Coal
energy setback since 2007, which became Oil
severe in 2012, which has not only affected
Natural gas
the economic prosperity and employment
generation capacity but has also adversely Wind
affected social cohesion. Sunshine
The total installed capacity of electricity
Electricit
generation till April 2020 has reached
35,972 MW, which was 33,542 MW in April y
shortfall
2019, showing a growth of 7.5% per
jumped
annum.
to 6,500
MW in
2017. 4
In Pakistan, the actual generation capacity of electricity < the
installed generation capacity of electricity.
Why????
Circular Debt High Energy Transmission Electricity
Prices & Theft
(Power & gas
circular debt (energy Distribution Billing
= Rs. 5.5 inflation has Losses
increased defaults
trillion in Jan-
2024) from 40.6% in Poor
the 1HFY23 to Planning
= 5.1% of 50.6% in
GDP. 1HFY24)
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Pakistan – Electricity Generation
Petroleum and natural gas are mainly used to generate power……..
The Statistical Review of World Energy (2022) reports that in 2021,
natural gas = 41.7%, oil = 26.4%, coal = 17.4%, hydroelectricity =
9.35%, nuclear energy = 3.6%, and other renewables = 1.3%
According to EIA (2023) statistics, Pakistan’s total primary energy
generation = 1.93 quadrillion BTU in 2021
Pakistan’s total primary energy consumption = 3.35 quadrillion BTU in
2021.
Domestic energy generation can fulfill only 57.5% of the country’s
energy demand.
Pakistan relies heavily on energy imports to meet the remaining demand.
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Oil Consumption & NG Consumption & Production
Production
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Coal Consumption and Production, 1980-
2021
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Electricity Generation in Pakistan over the period
2010-2021
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Total Energy Consumption in Pakistan over the period
1980-2021
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CO2 emissions resulted from Energy Consumption,
1980-2021
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The transition from hydropower to thermal energy in power
generation threatens energy security and the development of a green
economy, thus exposing Pakistan to environmental deterioration and
vulnerability to global oil price shocks.
Pakistan’s air quality is among the worst globally, and the
government has been argued to take immediate action to rectify the
situation.
According to the World Factbook (2023), Pakistan’s electricity
generation > consumption; however, only 79% of the population
has access to electricity.
Main reasons for this discrepancy is the poor state of electric grids
and inadequate infrastructure for electricity transmission,
contributing to distribution losses (18.358 billion kWh) in 2021 (EIA,
2023).
In terms of GDP per energy consumption unit, Pakistan stands
significantly below the world average.
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Related Articles
Khalid, W., & Jalil, A. (2019). An econometric analysis of inter-fuel substitution in
the energy sector of Pakistan. Environmental Science and Pollution Research,
26(17), 17021-17031. https://doi.org/10.1007/s11356-019-05014-3
Khalid, W., Özdeşer, H., & Jalil, A. (2021). An Empirical Analysis of Inter-factor
and Inter-fuel Substituion in the Energy Sector of Pakistan. Renewable Energy,
177, 953-966. https://doi.org/10.1016/j.renene.2021.05.163
Khalid, W., & Özdeşer, H. (2021). Estimation of Substitution Possibilities
between Hydroelectricity and Classical Factor Inputs for Pakistan’s Economy.
Forman Journal of Economic Studies, 17(2), 69-101.
http://doi.org/10.32368/FJES.20211712
Khalid, W., Seraj, M., Khalid, K., & Özdeşer, H. (2024). The Impact of Renewable
and Non-Renewable Energy Consumption on Aggregate Output in Pakistan:
Robust Evidence from the RALS Cointegration Test. Environmental Science and
Pollution Research. https://doi.org/10.1007/s11356-024-34804-7
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THANK YOU
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