Analysis of Electric Power Generation Growth in Pakistan: Falling into the Vicious Cycle of Coal

Abstract

This paper aims to analyze national policies of Pakistan taking into account the complexity of electric power generation, growth, and complying with multilateral agreements. Systems thinking has been applied to understand the complexity of energy scenario of Pakistan by representing it with a causal loop diagram (CLD) which displays the interconnectedness and feedbacks of the system. Analysis is based on systems archetypes to diagnose the system behavior, i.e., falling into the vicious cycle of coal. A stock-and-flow model was employed to capture dynamics of energy generation quantitatively, indicating that a 5% GDP growth rate could be sustained based on current planning to increase electric power generation in Pakistan. Thus, in order to achieve a 7% GDP growth rate, as targeted in Vision 2025 of Pakistan, energy generation targets would need to be revised in the view of the sensitivity of increase in energy demand associated with GDP growth rate, while ensuring compliance with multilateral agreements.

Analysis of Sectoral Energy Demand in Pakistan

“…Therefore, the demand for energy remains higher in this sector. Similarly, the study of Durrani, Khan, and Ahmad (2021) specified that energy is an important element for economic growth as part of the productive process. Moreover, energy is inseparable from the production process of industries.…”

“…Similarly, Khan (2015) stated that medium to long-term gas demand in Pakistan depends on a single equation demand model where per-capital demand has a direct relation with real income, real prices, and real prices of a substitute. Correspondingly, Durrani, Khan, and Ahmad (2021) found that a high population growth rate, industrialization, rural gasification, and urbanization increase the demand for energy.…”

“…Energy is considered an essential element of a country; it is contributed to socio-economic development and recognized as an important commodity (Durrani, Khan and Ahmad, 2021). However, Pakistan has been in energy crises since 2004 and the energy shortfall has reached to 5,944 megawatts.…”

“…This is estimated to be around 2% of the annual GDP due to lower productivity, output, and exports (Abbasi, Abbas, and Tufail, 2021). Durrani, Khan, and Ahmad (2021) specified that the root cause of Pakistan's energy crisis is poor policy decisions with incomplete and unstable short-term planning approaches, a lack of advanced tools for accessing available resources, and a continuous increase in demand for energy. Rauf et al (2015) found that limited stakeholder interest, inappropriate decision-making training, and insufficient funds allocation to the energy sector make this sector vulnerable.…”

“…The quality of Pakistan's coal lies between sub-bituminous to bituminous which contains higher Sulphur, and low ash, which is suitable for power generation. Pakistan is the world's sixth-largest country with coal reserves (Durrani, Khan, and Ahmad, 2021). Thus, the government plans to increase the share of coal in the overall energy mix.…”