ISLAMABAD: The government has provided subsidies worth Rs 1100 billion to the power sector during last four years (2008-2012) which is 2.5 percent of Gross Domestic Product (GDP).
The estimated cost of power crises to national economy is approximately Rs 380 billion per year which is around 2 percent of GDP, an official source said here on Tuesday.
The official said electricity and gas shortages are considered to be the primary cause of constrained production activities in a number of industries and added energy intensive industries (petroleum, iron and steel, engineering industries and electrical) shaved off 0.2 percentage points from real GDP growth in 2010-11 and in 2011-12.
Giving impact of energy shortage, he said the liquidity crunch in the power sector has resulted in under utilization of installed capacity of up to 4000 MW which affected investment in power sector.
During ongoing year, energy outages in the country continued to be the dominant constraint in its growth.
He said flood was one of the factors which caused electricity and gas shortage as it damaged the distribution network (i.e. 90 percent of distribution transformers to the petroleum and gas fields).
Lower accumulation of water reserves in dams along with high international prices of oil has also compounded the pressure on electricity as there is still significant share of oil (furnace) in electricity generation (about 35.1 percent) which is vulnerable to the international prices.
Further the oil refineries have also been running below capacity, thus constraining the supply of oil and other fuels, the official said and added likewise, in the gas sector, Pakistan faced severe shortages that exceeded approximately 2 billion cubic feet per day as local production was unable to keep pace with the requirements of the country.
This was due mainly to the depletion of existing resources, unfavorable law and order situation and lukewarm interest of exploration and production companies etc, he said and added however, the geographical location of the country makes it a favourable potential market for the import of natural gas from its neighboring countries like Iran, India and Turkmenistan.
The government has, therefore, taken the initiative to import gas from these countries. The initial projects in this regard are Iran-Pakistan Pipeline and Turkmenistan-Afghanistan-Pakistan- India gas pipeline. To mitigate the energy crisis, the government has notified the Liquefied Natural Gas (LNG) Policy 2011 which encourages private parties to develop LNG projects and sets them free to participate in any segment of the LNG value chain.
In order to solve issues in power sector, the government has decided to construct five multi-purpose water storages in the country during the next 10 -12 years.
The Diamer Basha Dam Project - the world's highest Roller Compacted Concrete Dam - is the most mentionable achievement. Also Pakistan is one of the beneficiaries of Tetra-partner power import project under the head of Central Asia-South Asia (CASA-1000) electricity trade.
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