An unprecedented deluge has transformed one-third of Pakistan into an inland sea leaving 33 million people homeless and causing approximately $30 billion of economic damage. This devastating monsoon, the largest on record, turned parts of the Indus River into a 100-kilometer-wide lake. These “monsoons on steroids,” as described by the UN Chief, have caused a massive humanitarian crisis, drowning more than 1400 people and injuring thousands more. This humanitarian disaster is soon to be matched by an avoidable energy disaster.
This crisis highlights why governments should prepare for the impending climate crisis and the importance of resiliency inside the energy sector. The energy sector’s reciprocal relationship with other economic activity, especially agriculture, make resiliency particularly vital for Pakistan and other developing countries. Extreme heatwaves, wildfires, and now this “superflood” showcase that Pakistan is on the frontline of a deepening climate crisis. Being the eighth most at-risk country for climate change, Pakistan’s lack of preparation and mismanagement can hopefully serve as a cautionary tale to inspire climate preparedness reform world-wide and inside Pakistan itself.
Pakistan’s energy sector is particularly vulnerable to exogenous shocks and rising input costs due to Pakistan’s reliance on imported fossil fuels and infrastructural bottlenecks. Pakistan gets 27% of its energy from hydropower, but with the country reliant on a single primary river system, the Indus and its tributaries, the recent floods have endangered major power grids and exacerbated power shortages across the country.
In the northern area of Gilgit-Baltistan, which possesses a massive hydropower potential and is the gateway for the China-Pakistan Economic Corridor (CPEC), 22 power stations have been damaged, leaving 90% of the region without electricity. In the Southern province of Sindh – the hardest hit by the floods — power stations in the Khairpur district remain inundated, leading to increased power outages. Last week authorities scrambled to successfully secure the Dadu power station, which supplies electricity to six other districts, as a forecast of heavy rain threatened a blackout over most of interior Sindh.
Hydropower is not the only energy source devastated. Numerous gas pipelines in Balochistan have been damaged, cutting off supply to the UCH Power Station, which supplies 932 MW of electricity to the country. While repair works are underway, consumers continue to face 10-15 hours of blackouts daily across the country. The lack of power supply has also pushed up energy costs for the people of Pakistan.
This energy crisis couldn’t come at a worse time, occurring amidst a near default before IMF approved a $1.1 billion loan. In addition, Imran Khan’s ouster from office, his call for early elections, inaction from the incumbent government to stabilize the country, and the controversy surrounding the appointment of a new army chief has increased political instability and economic uncertainty in the country.
Rising energy bills and blackouts are not just a product of the devastation caused by the recent floods. They are a consequence of Pakistan’s non-diversified energy strategy and lack of infrastructural resiliency. These floods have shattered an already broken energy system.
Pakistan faced a massive energy crisis even before the floods as its energy import costs skyrocketed due to soaring global commodity prices. Islamabad paid $4.9 billion for its LNG import bill alone for the year ending June 2022. Despite the worsening impact of imported energy on the country’s fiscal standing, Pakistan opted to secure more foreign LNG supplies while consciously eschewing domestic investments since in the short term it is easier to fill the gaps in energy demand given the existence of production infrastructure and the ease with which LNG-powered electricity can be added to the national grid. With Pakistan only sourcing 6% of its power from renewables and 4% from nuclear, this lack of diversification has proven to be disastrous.
Even in its limited bids to diversify power generation, to reduce production costs, and conserve crucial foreign currency reserves, Pakistan diverted its focus away from fuel oil not to cleaner gas or renewables, but towards a politically cheap and convenient, yet heavily polluting fuel: coal. CPEC-led coal power projects are unsustainable because of increased greenhouse gas emissions and coal’s eventual economic obsolescence. These projects are also worsening Pakistan’s debt crisis.
Simultaneously, the poorly executed Iran-Pakistan gas pipeline project has fallen victim to sanctions imposed on Iran and has failed to extend any benefits to Pakistan to resolve its energy woes despite the political endangerment and reputational risks. While recent developments including considerations between Pakistan and Iran to conduct energy trade by way of barter to avoid triggering US sanctions signal that the project may resume again, the security threat posed by separatists and the continuation of sanctions on Iran impedes a comprehensive implementation of this energy engagement.
The recent floods, combined with Pakistan’s economic and energy mismanagement, are leading to the emergence of a cyclical crisis. Record inflation is set to further reduce consumer purchasing power as the full impact of floods, shortage of domestically produced food supplies coupled with rising energy production costs, will increase electricity and grocery bills.
Devastation across the fertile heartland of Pakistan will not only impact domestic food security but also endanger Pakistan’s export revenues from agricultural products, which are crucial to service its foreign debt and energy import bills. Rising global LNG and oil prices have already created massive inflationary pressures in the commercial sector of Pakistan, with floods further choking commercial activity due to power outages. This ongoing energy crisis will continue as damage caused to the existing energy infrastructure will significantly reduce Pakistan’s capacity to produce electricity.
Amid such a multi-pronged crisis, Prime Minister Shehbaz Sharif’s approval of a 10,000 MW solar power project called the National Solar Energy Initiative alongside plans to establish another nuclear reactor is a step in the right direction to cut Pakistan’s reliance on imported energy. While China continues to push forward its coal power investment agenda through CPEC, the United States can protect its interest in Pakistan and decouple it from China by stepping up its energy cooperation with the country through investment in developing its untapped renewable and mineral energy resources, which would also help to stimulate economic growth.
Asia’s nuclear future is firing up. As a nuclear power, Pakistan should also invest heavily in its own nuclear energy production, increase the capacity of its existing reactors, and establish new ones. Lastly, Pakistan should open trade with India for staple food items which would not only help in combating inflation but also in facilitating reproachment. Pakistan’s energy crisis and policy miscalculations represent an avoidable failure in the economic and energy sectors. Failure is an excellent teacher, hopefully everyone can learn from this one.
Co-written by Shallum David