Pakistan: Impact of the Russo-Ukrainian war on the power sector
Sahar Iqbal
Akhund Forbes, Karachi
Pakistan’s problem
In addition to the Covid-19 pandemic and the 2022 floods, the war in Ukraine has impacted energy security in Pakistan. On 24 January 2023, there was a nationwide power outage, a blackout that drove the country into a state of anxiety regarding energy insecurity in Pakistan.
In addition to the dilapidated British colonial-era power grids, a substantial reason for the power outage could have been the drastically low quantity of foreign fuel in Pakistan’s reserves. Since the conflict in Ukraine, Pakistan, being a neutral and a non-aligned player, has had to be extremely cautious in choosing between a long-term, often coercive alliance with Washington and a promising partnership with the Kremlin.
While India possesses the diplomatic clout and financial independence to have multilateral ties with Washington and Moscow simultaneously, Pakistan cannot purchase oil from Russia due to the threat of sanctions from the West.
The legal framework for power in Pakistan
The Renewable Energy Policy 2006, which lapsed in 2018, provided the legal and regulatory framework for the development and financing of renewable energy projects. According to the new Renewable Energy Policy, 2019, the Government of Pakistan (GoP) aims to derive 60 per cent of energy from renewable sources by 2030, which will not only reduce dependence on foreign fuel but also help Pakistan achieve its climate goals.
The Ministry of Energy (Power Division) is the executive arm of the GoP responsible for implementing federal policies in the power sector and coordinating with provincial governments. The National Electric Power Regulatory Authority (NEPRA), the apex regulatory body, oversees electric power services in Pakistan. K-Electric, Bahria Town (Pvt) Ltd, distribution companies and the National Transmission & Despatch Company provide electricity distribution and transmission services under licenses from NEPRA. Within the Alternative Renewable Energy (ARE) Policy 2019 framework, ARE-independent power producers and ARE distribution generators generate power for sale or self-use. The Private Power and Infrastructure Board is a one-window facilitator for conventional private power generation projects, and Alternative Energy Development Board coordinates with the Private Power and Infrastructure Board for policy consistency. Provincial governments and regions, such as Gilgit Baltistan, and Azad Jammu and Kashmir, support the development and implementation of ARE projects in their territories, with the Alternative Energy Development Board ensuring provincial representation for smooth project execution.
At present, there is no national legal and regulatory framework for selling environmental attributes; however, Pakistan is a signatory to the Kyoto Protocol and the Paris Agreement, which allow access to global carbon crediting market, environment and climate funds.
Pakistan’s options
Pakistan cannot, at this point, make drastic foreign policy changes and commence oil trade with Russia as sanctions from North Atlantic Treaty Organization (NATO) powers would prove to be unbearable. It seems as if the best course of action for Pakistan to meet its energy demands is to focus on the development of renewable energy infrastructure and resources.
Pakistan has substantial potential for wind-powered electricity production along its southern coastal regions, with 26 operational private wind projects generating 1,335 MW. The revised Renewable Energy Policy supports the development of small-mini-micro hydroelectric projects, primarily in remote areas. Pakistan’s Indicative Generation Capacity Expansion Plan targets adding 13,000 MW of hydropower capacity by 2030. Due to ample sunlight, solar power is becoming prevalent in Pakistan, with six solar projects totaling 430 MW providing electricity to the grid. Rooftop solar panel installations are increasing, and the government aims for at least 1 million customers and an additional 3,000 MW of solar power through net metering. Opportunities in this sector include solar and wind equipment, biomass boilers, transmission and distribution equipment, biogas equipment and technical consultancy.
Recently, the United Nations Framework Convention on Climate Change’s (UNFCCC’s) COP 27 Summit established a fund for climate-affected developing countries, of which Pakistan is a highly eligible beneficiary. A large influx of funds is expected, which will be available to the GoP to spend on the development of climate-related sectors, primarily renewable energy.
Conclusion
Pakistan suffers from energy issues that manifest themselves in the form of frequent price hikes for petrol and electricity. While the country has been plagued by power outages and fuel price hikes for the past couple of decades, the war in Ukraine has exacerbated this issue. Pakistan’s options are limited as the country’s foreign trade policy is impeded due to coercive diplomatic alliances and a general inability to exercise autonomy on the global stage. However, the legal and policy framework for renewable energy development in Pakistan, while it still needs further development, provides a landscape for investment in the sector. Investing in renewable energy production will not only propel Pakistan towards self-reliance in terms of energy but also help mitigate the severe climate crisis.