The recent blackout in Pakistan is a stark reminder of the huge energy crisis facing Islamabad. Pakistan, which is on the verge of bankruptcy, should focus on energy conservation and immediate reforms in the energy sector. But an energy crisis does not face Pakistan alone. This affects other South Asian countries including Bangladesh and Sri Lanka, hurting their economic prospects. A fast-growing India also cannot afford to be complacent, as the massive power outages in April last year showed, and all the more because it is facing the decline of China and the rise of coal and natural gas giants like Vietnam and Indonesia. Competes with rich Asian countries. as a manufacturing hub. The International Energy Agency says that India is expected to have the world’s largest increase in energy demand this decade.
huge energy crisis in pakistan
Pakistan’s Energy Minister Khurram Dastgir has insisted that the blackout was not a major crisis, but the result of an economic struggle. On 23 January, the authorities introduced nightly load shedding in the winter months to conserve fuel. When engineers rebooted the system, voltage fluctuations tripped power grid stations, causing an outage of about 15 hours. The cascading blackout affected large parts of the cash-strapped country of 220 million, from the capital Islamabad to its economic nerve center Karachi.
Need to improve power sector
The country imports costly oil and natural gas to generate most of its power, but is running precariously low on foreign exchange reserves, and must conserve energy. Load shedding has taken place due to high fuel cost and heavy transmission and distribution (T&D) losses. Half-hearted reforms in the power sector have not yielded results so far. While generation capacity has increased in recent years, T&D losses due to poor infrastructure, power theft and unpaid bills have remained high.
Indeed, its energy crisis has crippled its domestic industry for decades. The textile industry is its lifeline and accounts for 60% of its exports, but the Pakistan Readymade Garments Manufacturers and Exporters Association has warned of a 20% drop in exports if the power crisis persists.
Energy crisis in Bangladesh and Sri Lanka as well
The acute power shortage is also a major challenge for Bangladesh, a country on the cusp of an economic boom. The biggest victim is the country’s readymade garments industry, which accounts for over 80% of its exports.
Rising oil and gas prices have forced Bangladesh to shut down some of its diesel power plants and run many at half capacity, leading to power shortages. Apparel exports to shrink by the end of 2022 as load shedding takes its toll. The Asian Development Bank has revised its growth forecast for Bangladesh in fiscal year 2023 to 6.6% from 7.1%. And falling exports will deplete its foreign exchange reserves, making it difficult to afford the costlier fuel.
Meanwhile, a bankrupt Sri Lanka is unable to import costly energy as the country faces its worst economic crisis in decades.
India cannot be satisfied
When India reopened after the lockdown in April 2022, a surge in electricity demand amid a heat wave depleted coal stocks at power plants, leading to a crisis. With the supply of coal to power plants rationed, energy-intensive factories draw power from the grid, exacerbating power shortages.
The crisis showed that India must be prepared with a battle plan to meet the potential increase in electricity demand in the coming years. The International Energy Agency believes that India will see the world’s biggest jump in energy demand this decade.
Hoping to profit from China’s erosion as the world’s factory, India will compete with coal and natural gas-rich ASEAN to emerge as a manufacturing hub. Vietnam is rich in coal, although its rapidly growing economy has forced it to import coal as well. Indonesia has abundant natural gas while Malaysia has abundant oil. And ASEAN countries also have aggressive renewable plans. Vietnam, in particular, is aggressively building solar capacity.
India is also transforming its power sector and diversifying its energy mix. The share of coal in electricity generation is expected to drop from 75% to 55% by 2030, with renewables accounting for 35%. And it is pursuing next generation power sector reforms especially in distribution through the Electricity Amendment Bill 2022.
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