The generator challenge

Highly agonising though it is but the use of generators has now become a part and parcel of our lives and claims a considerable chunk of the country’s foreign exchange resources. According to the latest data released by the Pakistan Bureau of Statistics (PBS), imports of generators have risen by as much as 20.4 percent to dollar 775 million during the first seven months (July-January, 2015) of the current fiscal year as compared to dollar 643 million in the corresponding period of FY14. It may be noted that the imports of generators had also risen by almost 12 percent to dollar 1.07 billion in 2013-14 compared to dollar 958.6 million a year earlier. Punjab, which has been hit very hard by energy shortages, holds 60-70 percent share in total arrival and consumption of foreign generators. Khurram Saigol, President of Pakistan Machinery Merchants Group (PMMG) has revealed that industrialists in Punjab were importing over 20 KVA (kilo volt amps) diesel generators in large numbers and also purchasing second-hand imported generators. This was due mainly to the reduction of Rs 28 per litre in diesel price from September, 2014 till February, 2015 that had curtailed operating cost of diesel generators for the industrialists. Future cuts in diesel price may push up the demand for diesel generators further in the coming months. However, over 90 percent of the ordinary people prefer running their residential/portable generators on natural gas.

Such an insignificant piece of information may not be an eye opener for a vast majority of the people who by now have calmly resigned to their fate, but should be taken seriously by the policymakers of the country. For all intents and purposes, energy shortages in the country have become a pain in the neck for ordinary citizens and a huge drain on the country’s economy. Sufficient supplies of energy are, of course, the lifeline of an economy and a crucial input for sustained industrial, commercial and domestic activities. Energy disruptions and shortages not only result in the loss of economic growth but affect employment, social cohesion and frustration level in an economy. An energy crisis in Pakistan had been brewing since 2007 and has continued to deepen in the recent years due to the absence of effective planning, a non-viable economic and financial strategy, high transmission and distribution losses and persistent accumulation of circular debt. The misfortune of this country is that various governments have been claiming impressive strategies to increase energy supplies to adequately meet the requirements of the country but the situation on the ground tells a different story – with loadshedding increasing almost every year. The situation, in fact, has come to such a pass that government promises on this account now mean nothing for public at large and an ordinary person is inclined to tear his hair when he is reminded of the great prospects of Thar coal, the TAPI gas pipeline, electricity imports from India, power production from alternative sources of energy etc by the government to fill the gap in the demand and supply of electricity.

The truth is that while the economy of the country is suffering immensely due to a woeful lack of energy supplies, life for an ordinary person has become a constant struggle. The value of imports of generators so far and a substantial decline in the prices of diesel, etc, suggest that the import bill of the country for generators could be as high as nearly dollar 1.4 billion this year. Buying season for generators normally begins from April and lasts upto August. Considering the foreign exchange expenditure on generators, this is a huge burden on our annual foreign exchange budget and as long as loadshedding exists, there seems to be no escape from this cost and the overall misery caused to the lives of all and sundry. However, the government could provide some relief to people and businessmen of the country by undertaking several policy measures. For instance, it needs to encourage the setting up of industrial units to produce high quality generators locally through appropriate adjustments in tariffs and other incentives to meet the domestic demand. This is particularly so because Chinese generators found in abundance in the local market are generally of low quality; these create a lot of noise and need major repairs very often. As such, not only is this a source of major inconvenience for the local consumers, this also cost them a great deal for keeping them in a running order. However, the long-term solution of the issue is obvious. The government needs to concentrate all its efforts and devote enough resources to fill the supply-demand gap in the energy sector as early as possible by undertaking practical steps, which could be really result-oriented and useful for the country. Building of grandiose and showy projects could be postponed for another day.