Electricity consumption in Pakistan is expected to “fall” in 2024

• Pakistan’s electricity demand fell by almost a sixth last year.
• Power consumption is an important economic indicator.
• Pakistan is trying to reduce the use of furnace oil.

The country’s power consumption is expected to fall again this year due to higher tariffs and tepid industrial activity, a top executive at the country’s largest power company said. Reuters.

Pakistan’s electricity demand plunged by almost a sixth last year, and a drop in 2024 would mark the first time in 16 years that annual electricity use has fallen consecutively, according to data from energy think tank Ember.

“There is demand destruction from the industry side because the industry is unfortunately not growing,” said Hubco Chief Financial Officer Muhammad Saqib. Reuters on the sidelines of the Energy Summit 2024 in Karachi.

Energy consumption is an important economic indicator in the growing 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.

“Due to the significant increases in consumer tariffs, people are obviously saving fuel by trying to save energy,” Saqib said.

Poor and middle-class households are still feeling the impact of Pakistan’s bailout from the International Monetary Fund last year, which has helped drive up retail prices, including fuel and electricity charges.

Power outages are also common in Pakistan, especially in remote rural areas, due to grid problems, fuel import delays and hard currency shortages, although the frequency of such outages has decreased in recent months.

Saqib said he expects the failure to make long-term upgrades to Pakistan’s electricity grid will continue to contribute to inefficient supply patterns, including the use of expensive and more polluting furnace oil despite the availability of cheaper alternatives such as natural gas.

“There is no reason to use furnace oil because Pakistan has ample capacity of imported LNG (liquefied natural gas). But due to grid constraints, we have to use furnace oil this summer as well,” he said.

Pakistan is trying to limit the use of furnace oil for power generation and boost gas-fired power generation.

Saqib said grid restrictions would likely limit coal-fired power generation and thus coal imports.

Hubco’s power plants would require 3.5 million metric tons of imported coal a year if the plants are operating at full capacity, but the company does not foresee imports exceeding 750,000 tons this year, he said.

“There is not enough capacity on the transmission lines to really use these imported coal units, although they are sometimes cheaper than LNG-fired power.” said Shakib.