Pakistan wants to conserve energy and save money. Will it succeed?

Pakistan announced last week that from 1 July, commercial centres and markets must close at 8pm, as part of a government-led national plan to save energy.

Officially titled the ‘Strategic Plan’ by the country’s National Energy Efficiency and Conservation Authority (NEECA), established under the Ministry of Energy, the policy was first discussed in mid-2022. It was then approved by senior ministers in December 2022.

At that time, Pakistan’s federal minister for climate change Sherry Rehman highlighted a reduction in fossil fuel use as a benefit of the plan, while the official policy brief also mentions an “associated benefit of reduction in GHG [greenhouse gas] emission to the tune of 35 MTCo2e [metric tonnes of carbon dioxide equivalent]”.

But remarks from key government representatives and prime minister Shehbaz Sharif have indicated that the policy has one key objective: to spend less of the country’s dwindling foreign exchange reserves on imported fuel at a time when the Pakistan economy is on the verge of bankruptcy.

Ahsan Iqbal, Pakistan’s minister for planning and development, whose ministry is spearheading the energy conservation policy, told The Third Pole: “Our current account deficit is growing. We have to save every single dollar and this plan is one solution.”

Pakistan’s rising fuel bills

The Pakistan government’s anxiety around energy costs stems from its increased spending on imported fuel. According to the government’s annual economic survey, Pakistan’s oil import bill increased by 95.9% to USD 17.03 billion for the period July 2021 to April 2022, compared to USD 8.69 billion for the corresponding period in the previous year. The survey attributed the staggering increase to “higher oil prices in the global market…[and] massive depreciation of the Pakistani rupee [which] is making oil more expensive, triggering external sector pressure and widening the trade deficit of the country.”

In May this year, inflation in Pakistan reached highs not seen since the 1950s. It is in this context of rising import bills, high domestic inflation and fears of economic collapse that the energy conservation plan has been introduced.

While the government has set the 1 July deadline for early market closures, timeframes for the remaining actions are yet to be made public.

“Pakistan can save up to 15% of energy under this plan and curtail its ballooning import bill,” Sardar Mohazzam, managing director of the NEECA, told The Third Pole.

“The government is serious about the plan and its implementation is in full swing,” Mohazzam added.

Mohazzam said that taking these steps ahead of Pakistan’s peak electricity demand in the summer months – which typically more than doubles to 29,000 MW in the summer months compared to 12,000 MW in winter, largely due to use of fans in the heat – will have a “substantial impact”.

But as the government sets out its stall on energy conservation, questions of implementation and market resistance persist, while experts question what the government is doing to end Pakistan’s long-term reliance on fossil fuels.

Getting Pakistan’s provinces on board

Though Pakistan’s energy efficiency plan was first announced six months ago, no clear deadline was issued for actions to be enforced, and implementation has been a major challenge for the federal government. For instance, from the policy’s announcement to date, markets have remained open as per normal timings. The government’s recent announcement of the 1 July deadline, in a press conference, indicates that that the policy measures announced six months earlier remain on paper only.

Pakistan’s defence minister Khawaja Asif told The Third Pole that the delay between the initial policy announcement and that of the July deadline was due to the challenge of getting all the provincial governments on board with the energy conservation plan. “We had a policy, and a particularly comprehensive one when it comes to power, but some provinces were not on board and actually mocked the policy,” he said.

Since the 2010 passage of the 18^th Amendment to Pakistan’s constitution, significant powers, including legislative and financial autonomy, have been devolved from the central government to the provinces.

“We suggested implementation [of the energy conservation policy] last year, when Pervez Elahi was chief minister [of Punjab province]. But there was huge resistance in Punjab,” said Asif.

Pervez Elahi is an ally of former prime minister Imran Khan’s party. A political crisis in Pakistan, which was triggered in April 2022 with the ousting of Imran Khan, is still ongoing, with the incumbent government and Khan’s party at loggerheads.

When asked how the central government will get provincial governments on board with the energy conservation plan, minister Ahsan Iqbal replied: “It is for this reason that we have taken the cabinet’s decision [on the energy plan] to the National Economic Council. The Council also includes the chief ministers of the provinces so now they are a party to the decision.”

“None of us can afford to continue down this path anymore. We have the buy-in of the provinces, and hope they take a step in the right direction,” he added.

Criticism and resistance to the energy conservation plan

Sardar Mohazzam of the NEECA explained to The Third Pole that asking people to change their behaviour remains a challenge. Commercial markets in Pakistan often open late in the day and remain open late into the evening, making the government’s decision to mandate 8pn closures a bitter pill for traders to swallow.

“Implementation of such measures requires careful analysis of the current political economy and social circumstances,” said Mohazzam.

Atiq Mir, chairman of the All Karachi Traders Alliance (All Karachi Tajir Ittehad), said that early market closures is a “flawed approach”. “We will not accept proposals that are detrimental to traders and shopkeepers,” said Mir. When The Third Pole contacted Mir in May 2023, he had said the measure had thus far not been implemented in the port city “due to their stiff resistance”.

Afia Malik, a senior researcher at the Pakistan Institute of Development Economics, said that while Pakistan’s energy conservation plan is promising, there have been many others over the past two decades. “The real question has always been the implementation of plans,” she said.

Malik argued that the government should address the major issue of circular debt in Pakistan’s power sector, which she put at USD 15 billion. This refers to the recurring problem of unpaid electricity bills and inefficiencies in the energy sector, involving a cycle whereby power generation companies face payment delays, leading to a shortage of funds for fuel purchase and maintenance, and ultimately hindering power supply and exacerbating the debt issue.

Malik also noted that the amount of energy used by each person in Pakistan is not high compared to other countries.

Shaheera Tahir, a researcher at Islamabad-based think tank the Policy Research Institute for Equitable Development (PRIED), said that while the government’s focus on energy conservation and efficiency is promising, the plan was not introduced proactively but “when the crisis had already hit”.

“The plan sets a target of saving 3 million tonnes of oil equivalent [a unit that quantifies the amount of energy released when one tonne of crude oil is burned] by 2025. However, with the current pace of work, the timely completion of the targets looks difficult,” Tahir said.

Tahir added that campaigns designed to effect behavioural change appear promising, but that the efficient generation of electricity is overlooked in current plans.

“Coal is not discussed at all for its adverse impacts on the environment and on communities. Despite the low efficiency of Thar coal [extracted in Pakistan’s Thar region], we see new power plants being inaugurated,” Tahir said.

Energy specialist Saadia Qayyum expressed scepticism about the implementation of the energy conservation plan. “The plan has the right contours and right intentions in place, but there is a question mark on implementation: how are the authorities going to replace the fans or get the building codes implemented?”

“There is a lack of capacity in the institutions,” she said. “We are quite late in terms of realizing energy efficiency is important.”

It’s now or never for energy plan, says Pakistan government

When asked to respond to questions over implementation of the energy conservation plan, minister Ahsan Iqbal said it is one component of a bigger strategy.

“When you are bleeding, you need emergency treatment as well as long-term therapy. They are not mutually exclusive. We need a quick fix to stabilise the haemorrhaging of our economy, and that is the reason for this plan,” Iqbal said.

“This plan is different [from previous ones] because the pressure is on. The dollar challenge is a very strong imperative. If we do not change energy usage and consumption, it will be a disaster.”

Questioned on use of coal in energy production, Iqbal said: “We will not invest in imported coal, and will only use indigenous coal.”

When The Third Pole raised the issue of locally produced coal, particularly lignite, being highly polluting, Iqbal responded: “We are using ultra supercritical technology in these coal plants, so they have lower emissions. We are doing clean coal, as the technology has changed. The new generation of coal plants is clean. We will use this energy as a base load, and add solar and wind power to this as well.”

When asked to put the minister’s ‘clean coal’ comment into perspective, environmental lawyer Ahmad Rafay Alam said: “What the hell is clean coal? It’s like saying light cigarettes are healthy! There is nothing clean about this coal. The Centre of Research for Energy and Clean Air did a study in 2020 that said up to 30,000 people would prematurely lose their lives on account of air pollution emanating from Thar’s coal plants. Consuming coal just because we [Pakistan] have it isn’t a good enough argument. We have plenty of renewables like sun and solar too – renewables which are cheaper than other forms of electricity produced in Pakistan.”