The acute power crisis that has gripped Pakistan over the last few years has had a major impact on the economic, political and social well-being of the country. The crisis is the most palpable to an average citizen of the country in terms of its direct and trickle down effects.
There exists a strong correlation between availability of electricity and the level of social human development. In 2002, UN set a limit of 1000KwH per capita electricity consumption for a society to experience medium level of human development. The per capita usage in Pakistan stood at 430 KwH in 2006. As evident further from the below figures, the crisis has torn into the social fabric and everyday life of the citizens of Pakistan. Following are some of the major impacts the crisis has had on the country
- Economic Impact- Growth rate hampered
- Impact on Industry- Closure of Industry
- Impact on Social Life- Job opportunities lost
- Political ramifications- Declining popularity of the Government
According to a very recent Asia Development bank Survey, power crisis has been termed as the major culprit in putting brakes on the economic growth of the country. The report states:
“For every unit of power sold, there is a loss to the sector reflected in the form of subsidies. An outstanding accumulation of Rs220 billion was carried into FY2012, and an additional financing of 1-1.5% of GDP is likely to be required in FY2012.”
“Losses arising from power and gas shortages held down GDP growth by 3–4 percentage points in FY2011 and FY2012”
These figures quoted by ADB translated to roughly Rs800 billion per year and more than Rs3 Trillion since 2008 cumulative.
The industrial sector which completely relies on the availability of power has been severely constrained, especially the textile industry. Textile contributes more than 60% of Pakistan’s total exports according to official data. The power shortage has forced hundreds of units to close down in Faisalabad. The city has instead turned it into a heaven for metal dealers who buy machinery from the closed units and sell them off as scrap. According a Sheikh Abdul Qayyum, former head of the city’s chamber of commerce and a factory owner, till July 2011, 800 units, of a total of 2000 factories in Punjab had closed down.
Economic losses stated earlier as a result of electricity crisis has a direct impact on industry and job opportunities creation. The total loss to economy owing to Power crisis according to the above stated reports adds to 15 percentage points since 2008. This is the ‘forgone’ GDP, meaning by, services and values of goods that the economy would have otherwise been able to generate. Using the employment elasticity calculated by Planning Commission, these economic losses translate to job losses of 4.1 million, almost equal to 7.5 percent of labor force.
The electricity crisis is fast becoming an issue of center versus provinces where the provincial governments feel hard done by the national government. The central government has been unable to distribute the country-wide loadshedding equally. Punjab appears to be the most badly hit by the electricity crisis with maximum hours of loadshedding. Punjab is also the hub of industry and due to electricity shortfall has witnessed maximum job losses. 0.75 million daily wages workers in only Lahore have been rendered jobless. The disparity becomes even more evident considering the fact that LESCO has the minimum line losses.
The new constitutional amendments provide provinces with the authority to generate their own electricity however for international investment; a sovereign guarantee needs to be made by the national government. The provinces especially Punjab believes that the national government is not supporting their cause by backing away from a sovereign guarantee. This shabbytreatment by the centre towards the province has become a source of discord among the national and provincial governments.
These are some of the impacts that are tangible and can be quoted in figures and estimates. The crisis however has resulted in a general sense of desperation among the masses. Being exposed to lengthy and un-announced power outages in summers have forced the people to come out in protest against the government and destroy public and private property. The government’s approval ratings have gone down and as a result, not just an average Pakistani, but the government too faces a battle of survival in the face of electricity crisis.
Immad Alam is a Research Writer at Vision21