Power Deficit In Pakistan

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The demand for electricity has continued to out-pace the growth rate of the economy. A power shortage (first) appeared in 2006, which at times crossed 5,000 MW. This resulted in severe load shedding, with urban areas experiencing brown-outs for 8-12 hours each day. At that time, small cities and rural areas often experienced up to 18 hours of load shedding every day. Furthermore, even industries with dedicated supply arrangements often experienced a suspension of gas supplies up to 4 days every week during the winter months.

The shortfall in electricity has led to drastic measures, where markets are required to close early, and organizations are required to take a two-day weekend. These measures have effectively reduced the productive working time and shortened the social life of people.

An increase in electricity demand is directly linked to the growth of the country’s economy. With anticipatory growth in all sectors of the economy, it is expected that the demand for electricity will likely rise substantially in the coming years.

In contrast, the supply of electricity has been stagnant for the last decade, with insignificant increases in capacity.

The demand for electricity from the industrial sector, given current growth trends, is likely to rise substantially over the next five years. There has also been a rapid increase in the number of domestic electricity consumers in recent years due primarily to rapid urbanization and also the extension of the national grid to include an increased number of rural areas.

In order to solve this imminent disparity between supply and demand for electricity, the GOP has taken a number of steps to attract investors in its power sector. One key measure has been the simplification of policies and procedures for private sector participation. Moreover, the process has been made more transparent and competitive over the years. Another vital development has been the restructuring of WAPDA, in order to improve investor confidence in the energy sector. Furthermore, WAPDA has become more knowledgeable and developed a better understanding on issues related to IPPs. Thus, investors in the power sector are expected to benefit from rapidly rising demand and an improving regulatory environment.