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Power cuts worsening heat crisis

Interview: Gabriel DomínguezJune 24, 2015

Pakistan has been reeling under a sweltering heat wave in recent days, resulting in hundreds of deaths. The country's dire electricity situation has aggravated the people's misery, as economist Rajiv Biswas tells DW.

Pakistan Hitzewelle
Image: Reuters/A. Soomro

The death toll from the heat wave that has swept across southern Pakistan in recent days has climbed to over 800, with most casualties registered in the port city of Karachi. In an attempt to deal with the crisis, the government has declared emergency in hospitals and appealed to the military for help in carrying out relief work.

The heat wave has once again spotlighted Pakistan's acute electricity shortages, with public anger mounting against the administration and power companies due to their inability to ensure adequate supplies. But the country's federal water and power minister, Khawaja Asif, claimed the heat deaths were not linked to power cuts, according to local media.

Nevertheless, the energy crisis dates back a long time denting the nation's economic growth prospects. In a DW interview, Rajiv Biswas, Asia-Pacific Chief Economist at the analytics firm IHS, explains the reasons behind Pakistan's power shortages and what needs to be done to overcome the challenges in the electricity sector.

Rajiv Biswas
Biswas: 'Years of neglect and lack of reform of Pakistan's power industry have contributed significantly to its deteriorating financial position'Image: IHS

DW: How dire is the current electricity supply situation in Pakistan?

Rajiv Biswas: Pakistan has been in an energy crisis for some years. The current shortfall in power generated is estimated at 5,500 Megawatts, with electricity production of 15,500 MW compared with demand of around 21,000 MW. As a result, there is significant electricity load shedding being implemented across Pakistan in both urban and rural areas.

What are the main reasons behind the power outages in the country?

Pakistan has been facing a power crisis for some years already, due to a combination of factors including low electricity tariffs due to subsidies, which resulted in accumulated losses for the electricity generators, as well as inadequate investment in new power generation capacity and high transmission loss rates due to poor infrastructure as well as theft of electricity.

What role have the power cuts played in the number of casualties from heatstroke during the current heat wave?

The long periods of load shedding each day have resulted in a lack of electricity supply, sometimes for over 12 hours per day. This has exacerbated the problems caused by the severe heat wave during June, with residents of Karachi and surrounding areas unable to use air-conditioning or fans for much of the day.

Furthermore, the lack of power supply has also prevented the use of water pumps for extended periods, which has also affected water supply, further increasing the negative effects of the heat wave.

To which extent does the government share the blame for this?

Years of neglect and lack of reform of the power industry have contributed significantly to its deteriorating financial position. A key constraint was the slow progress in undertaking pricing reforms for energy tariffs, which have contributed to the financial problems of the electricity generating companies.

Gradual pricing reforms have been implemented this year, and the total cost of electricity subsidies is expected to drop to 0.3 percent of GDP by fiscal year 2015-16, according to government projections.

How have the power cuts affected sectors of the Pakistani economy, such as industry and transport?

The ongoing power crisis has severely impacted upon the industry and transport sectors in recent years, as power shortages have had a crippling effect on industrial production.

The overall impact of the power crisis on economic growth may have lowered GDP growth by between one and two percent per year over the recent past. In response, the government has tried to prioritize the supply of power to industries, which has helped to mitigate the impact.

Do you expect this crisis to have any political consequences?

If Pakistan's power crisis continues for a protracted period, this could result in growing disenchantment among Pakistani voters about the current government led by Prime Minister Nawaz Sharif. Tackling the energy crisis had been a key electoral promise during Sharif’s electoral campaign in 2013. This could be a key factor that could result in a voter backlash against him in the next election.

How long do you think the energy crisis will last and what will it take to tackle the issue?

The Pakistani government is working to try to address the power deficit by building additional electricity generating capacity, using various energy feedstocks, including thermal coal, natural gas and hydroelectric power.

Pakistan Hitzewelle
'The lack of power supply has prevented the use of water pumps for extended periods,' says BiswasImage: Getty Images/AFP/A. Hassan

Pakistan and Qatar signed a new $21 billion LNG contract earlier in 2015, which will provide substantial new gas supplies for electricity generation, reducing the country's reliance on expensive diesel and furnace oil for power production.

The government also plans to add other types of new electricity capacity including thermal, solar and hydro power. Its intention is to provide sufficient electricity to meet domestic demand within three to five years. However due to the large existing power generation shortfall, population growth and rising energy demand, the government faces an ongoing struggle to keep pace with rising demand.

Rajiv Biswas is Asia-Pacific Chief Economist at IHS, a global information and analytics firm. He is responsible for coordination of economic analyses and forecasts for the Asia-Pacific region.