KARACHI: Pakistan’s largest private power company Hub Power Co Ltd (Hubco) expects the country’s electricity consumption to fall again this year due to higher tariffs and tepid industrial activity, its top official told Reuters.
Demand for electricity in Pakistan fell by almost a sixth last year, and a drop in 2024 would mark the first time in 16 years that annual electricity consumption has fallen in a row, data from energy think tank Ember showed.
“On the industrial side, there is a destruction of demand because unfortunately the industry is not growing,” Hubco Chief Financial Officer Muhammad Saqib told Reuters on the sidelines of the Energy Summit 2024 in Karachi.
Energy consumption is a key economic indicator in the emerging economy, and the expected decline this year underscores the challenges facing the newly elected government in debt-ridden Pakistan amid growing discontent among the poor.
“With the significant increase in consumer [electricity] tariffs, people are obviously skimping on fuel in an effort to conserve energy,” Saqib said.
Poor and middle-class households are still feeling the impact of last year’s International Monetary Fund (IMF) bailout of Pakistan, which contributed to higher retail prices, including fuel and electricity charges.
Power outages are also frequent in Pakistan, particularly in remote rural areas, due to grid problems, delays in fuel imports and a lack of hard currency, although the frequency of such outages has decreased in recent months.
Saqib said he expects the failure to implement long-awaited upgrades to Pakistan’s electricity grid will continue to contribute to inefficient energy supply models, including the use of expensive and more polluting fuel oil, despite the availability of cheaper alternatives such as natural gas.
“There is no reason to use heating oil as Pakistan has sufficient capacity of imported LNG (liquefied natural gas). But due to grid constraints, we also have to use heating oil this summer,” he said.
Pakistan is trying to reduce the use of fuel oil for electricity generation and increase electricity generation from natural gas.
Saqib said the grid curtailment is also likely to curtail coal-fired power generation and hence coal imports.
Hubco’s own power plants would require 3.5 million metric tons of imported coal annually if the plants run at full capacity, but the company does not expect imports to exceed 750,000 tons this year, he said.
“There is not enough capacity in the transmission lines to actually use these imported coal-fired plants, even though they are sometimes cheaper than LNG-burning power.” Saqib said.
