Muneeb ur Rehman

Pakistan’s energy prices are soaring, which hurts both consumers and industries. The country needs to diversify its energy sources and tap into the potential of renewable energy, Liaqat Ali Shah, Executive Director of the CPEC Centre of Excellence, Peshawar, told WealthPK.

According to the Pakistan Economic Survey FY2022-23, much of the energy in Pakistan is consumed by households (46.6%) followed by industries (28.2%). Explaining the pass-on effect of energy inflation on the consumers, he said, “Many industries in Pakistan, including food and beverages, textiles, and manufacturing, are energy-intensive. The higher energy prices lead to increased cost of production, which is eventually passed on to the households in the form of higher prices,” he said. According to the Pakistan Economic Survey, headline inflation, measured by the growth in CPI, was recorded at 28.2% during July-April FY2023 as against 11.0 % during the same period last year. “The primary factor contributing to energy inflation is reliance on the thermal energy sources. The country's limited domestic resources for thermal energy production result in the expensive import of petroleum products, particularly in the context of devaluation of the rupee against the US dollar,” he said.

In this backdrop, Liaqat Ali Shah underscored the need for diversifying Pakistan's energy mix. Transitioning away from coal and embracing wind, solar, and nuclear energy sources will enable Pakistan to fortify its economy against the volatility of global oil prices, he said. He added that renewable energy sources such as wind, solar, and hydropower have lower or zero fuel costs compared to fossil fuels. Once the infrastructure is in place, these sources can produce electricity at a relatively cheaper and predictable cost. “Pakistan has the potential to generate energy from sources other than the thermal one. Renewable energy sources can be deployed more easily in off-grid or less developed regions, bringing affordable and reliable electricity to more people,” he added. In a nutshell, rising energy costs are a major concern for both people and businesses. The solution lies in diversifying the energy sources.

Credit: INP-WealthPk