Electrification challenges

That the access to electricity rate in Pakistan stands somewhere over 90 percent is commendable with millions of individual gaining access to electric power, but the truth lies beyond the abstract numbers. World Bank in its recent policy paper, “Electrification and Household Welfare” tests the causal link between the quality of this access to household living standards and social welfare.

The paper first discusses how the actual access to electricity rate is dubious; take a look at various rates mentioned in the table that range anywhere between 65 percent to 98 percent; in other words, The WB paper suggests that 5–54 million people in Pakistan may lack access to electricity. That’s a big interval!
Besides the access rate, the reliability of this access and the costs associated are factors that determine the benefits that come with electrification. Forget the un-electrified; majority of the population that has access to power that comes with a baggage: lack of reliable electricity supply, which the policy paper points out has kept the country’s per capita electricity consumption flat for almost a decade, after peaking in 2006.

This lack of reliability comes in various forms – all of them discussed at length here several times. The cost of power generation, inefficient transmission and distribution, and the resulting circular debt raise the overall cost. First of its kind study for Pakistan establishes empirical evidence along two dimensions: access and reliability. The results how that electrification has a significant positive impact on households’ income as well as expenditure – a 37 percent increase in per capita income and 15 and 9 percent increase in food and non-food expenditure, respectively. Electrification is also associated with better health and education outcomes; and the study also finds evidence that it increases women labor force participation as well as decision making power.

The study also finds out that the net income loss from lack of reliable access to electricity for households is around $5.8 billion or 2.5 percent of GDP. These are conservative estimates that do not include the impact of lack of health and education related outcomes. Also since there is no final consensus on the exact access rates and that it could potentially be much lower than the official 97.5 percent.

Taking these electrification rates as they are, one can say that there has been some achievement. However, welfare comes with reliability. The real task is for the government to seriously turn to the main challenge: improving electricity quality. The previous government was able to bring down the number of load shedding hours significantly. However, much more is needed. The neglected T&D leg, debilitating infrastructure and the piling receivables are some daunting challenges that the new government will seriously have to take up.