Pakistan is cutting electricity to households and industry as the cash-strapped country can no longer afford to buy coal or natural gas from overseas to fuel its power plants. The country is struggling to procure fuel from the spot market after prices of liquefied natural gas and coal surged to records last month as the war in Ukraine exacerbated supply shortfalls.
Pakistan’s energy costs more than doubled to 15 billion dollars in nine months ended February from a year earlier and it isn’t able to spend more on additional shipments. About 3,500 Mega Watts worth of power capacity had been shut due to the fuel shortages as of 13th of April, according to a Twitter post by Miftah Ismail, who has been selected as Finance Minister by new Prime Minister Shehbaz Sharif.
A similar amount is offline due to technical faults, he said. The more than 7,000 Mega Watts represents almost a fifth of total generation capacity, according to Tahir Abbas, the Head of Research at Arif Habib Ltd. in Karachi. The electricity crunch is complicating the already tough economic challenge for Sharif — who has yet to appoint an Energy Minister — after former leader Imran Khan was ousted last week following a period of political turmoil.
A relatively poor nation that’s highly dependent on energy imports, Pakistan has been hit especially hard by rising fuel costs. Pakistan’s situation will not change in the near term since global dynamics are still the same, said Samiullah Tariq, Head of Research at Pakistan Kuwait Investment Co. There have been forced outages to deal with the energy shortages.
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