According to information released by the National Electric Power Regulatory Authority (NEPRA), one of the reasons why the economic growth rate dropped to just 0.29% in the fiscal year 2022–2023 was excessive electricity expenditures.
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NEPRA’s State of the Industry Report 2023 states that Pakistan’s high power costs have become a major issue impacting all facets of society. “The high price of electricity has had a major impact on the commercial, industrial, agriculture, and services sectors, aside from domestic consumers,” the research claims.
According to NEPRA, the depreciation of the rupee, rising fuel prices, and numerous other variables are to blame for the nation’s rising electricity costs. Pakistan is mostly dependent on imported gas, oil, and coal for its energy needs. The paper claims that the depreciation of the rupee raises import costs, which in turn affects electricity pricing and drives up consumer bills.
Therefore, the report stated that the most practical options for baseload electricity, from an economic standpoint, are nuclear and Thar Coal-based facilities. This means that coordinated efforts are required to further expand Thar Coal mines and related infrastructure, such as railways.
It is important to note that at full capacity, Thar coal power plants contribute about 10% to the energy industry. If this percentage is raised to 15% to 20%, electricity rates will be considerably reduced.
Yousuf M. Farooq, Director of Research at Chase Securities, stated that “this situation calls for increasing dependency and exploiting local coal resources,” adding that Thar power plants are the most economically viable electricity producers in the nation because of the indigenous Thar coal.
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According to him, the cost of Thar coal per unit is about Rs5-7/kWH as opposed to Rs15–25/kWH for imported coal. Pakistan is 50 years behind in this field. The Pakistani government must establish a sovereign fund or other instruments with the central bank to encourage investment in Thar coal in order to fully realize Thar’s potential, he stated.
He claimed that the coal mining sector is expensive and capital-intensive. These days, global financing is practically nonexistent, therefore public-private partnerships are the best option for obtaining funding locally.
Farooq continued, “To realize the full potential of Thar Coal, the creation of a sovereign fund and the encouragement of public-private partnerships are suggested, highlighting the urgency of strategic investments to advance Pakistan toward energy self-sufficiency and lessen the negative effects of the ongoing energy crisis.”