Key takeaways
- Thermal plants supplied 58.8% of electricity in 2022-23; hydel 25.8%, nuclear 8.6%.
- Alternative sources provided only 6.8% despite abundant sun, wind and water.
- Transmission and distribution losses exceed 15%.
- High industrial tariffs erode exporters' margins against regional competitors.
- Renewables, efficiency, smart grids and a tariff ceiling for exporters are proposed.
In this Business Recorder column (July 2023), Dr. Ghulam Mohey-ud-din links two problems that are often discussed separately: Pakistan’s reliance on imported fuel for electricity and the weak competitiveness of its exports.
The argument
According to the Economic Survey of Pakistan 2022-23, thermal plants generated 58.8 percent of electricity, hydropower 25.8 percent and nuclear 8.6 percent, with only 6.8 percent from alternative sources. In 2008 the mix was 65 percent thermal, 33 percent hydel and 2 percent nuclear. Dependence on costly, imported fossil fuels exposes the economy to price swings and supply shocks, and those costs flow straight into industrial tariffs.
The column argues that Pakistan under-uses its own renewable resources: sun, wind, water and biomass. At the same time, transmission and distribution losses above 15 percent, ageing infrastructure, outages and load-shedding add to costs. Governance weaknesses, regulatory gaps and institutional conflict keep the sector underperforming.
For exporters, the consequence is simple. High and unpredictable energy tariffs squeeze margins and pricing against competitors in China and the region. As buyers and competitors move towards clean energy, a fossil-heavy grid also becomes a long-term market-access risk.
What needs to change
- Expand distributed solar, wind, micro-hydro and biogas capacity.
- Invest in nuclear, coal gasification and shale gas with environmental safeguards.
- Modernise the grid to cut losses and improve reliability, using smart-grid technology and data analytics.
- Set energy efficiency standards and conservation rules.
- Introduce a tariff ceiling for export-oriented industries, with targeted support for vulnerable consumers during the transition.