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The Cost of Unserved Energy: Evidence from Selected Industrial Cities of Pakistan

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Author Info

  • Rehana Siddiqui

    (Pakistan Institute of Development Economics, Islamabad.)

  • Hafiz Hanzla Jalil

    (Pakistan Institute of Development Economics, Islamabad.)

  • Muhammad Nasir

    (Pakistan Institute of Development Economics, Islamabad.)

  • Wasim Shahid Malik

    (Department of Economics, Quaid-i-Azam university, Islamabad.)

  • Mahmood Khalid

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

This study is an attempt to explore the cost of unserved energy due to power outages in Pakistan that started in 2007. The study is based on a survey conducted for four major industrial cities of Punjab—Gujrat, Faisalabad, Gujranwala, and Sialkot. In addition to quantification of output losses, the effect on employment, cost of production, and delay in supply orders are also examined. The output loss is quantified using two-dimensional analyses, controlling for variations in the duration of outages and in the shift hours. The survey data reveal that employment has not suffered any significant drop due to alternative energy arrangements. These arrangements, nevertheless, have increased the production cost of the firms. Delays in the delivery of supply orders are also due to energy shortage. The study reports that the total industrial output loss varies between 12 percent and 37 percent, with Punjab as the major affected province. In the two dimensional analysis resulting in nine scenarios for each province, the ranges of losses in billion Rs are 132-400, 109-331, 17-54 and 11-34 for Punjab, Sindh, Khyber Pakhtunkhwa and Balochistan respectively. The overall industrial sector loss in volume ranges between 269-819 billion rupees. In the overall analysis, food and beverages, textile, and chemical product industries are respectively the top three industries on the scale of losses. However, in terms of percentages, the pottery and ceramic industry is the industry that suffered the most.

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Bibliographic Info

Article provided by Pakistan Institute of Development Economics in its journal The Pakistan Development Review.

Volume (Year): 47 (2008)
Issue (Month): 3 ()
Pages: 227-246

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Handle: RePEc:pid:journl:v:47:y:2008:i:3:p:227-246

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Related research

Keywords: Energy Crises; Output Loss; Manufacturing; Pakistan;

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References

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  1. Luis J. Álvarez & Emmanuel Dhyne & Marco M. Hoeberichts & Claudia Kwapil & Hervé le Bihan & Patrick Lünnemann & Fernando Martins & Roberto Sabbatini & Harald Stahl & Philip Vermeulen & Jouko Vilmun, 2005. "Sticky prices in the euro area: a summary of new micro evidence," Banco de Espa�a Working Papers 0542, Banco de Espa�a.
  2. Muhammad Shahbaz & Mete Feridun, 2012. "Electricity consumption and economic growth empirical evidence from Pakistan," Quality & Quantity: International Journal of Methodology, Springer, vol. 46(5), pages 1583-1599, August.
  3. Muhammad Nasir & Wasim Shahid Malik, 2011. "The Contemporaneous Correlation of Structural Shocks and Inflation— Output Variability in Pakistan," PIDE-Working Papers 2011:70, Pakistan Institute of Development Economics.
  4. Pasha, Hafiz A. & Ghaus, Aisha & Malik, Salman, 1989. "The economic cost of power outages in the industrial sector of Pakistan," Energy Economics, Elsevier, vol. 11(4), pages 301-318, October.
  5. Benjamin Bental & S. Abraham Ravid, 1982. "A Simple Method for Evaluating the Marginal Cost of Unsupplied Electricity," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 249-253, Spring.
  6. Rehana Siddiqui, 2004. "Energy and Economic Growth in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 43(2), pages 175-200.
  7. Nasir, Muhammad & Ur Rehman, Faiz, 2011. "Environmental Kuznets Curve for carbon emissions in Pakistan: An empirical investigation," Energy Policy, Elsevier, vol. 39(3), pages 1857-1864, March.
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Cited by:
  1. Kamal A. Munir & Salman Khalid, 2012. "Pakistan’s Power Crisis: How Did We Get Here?," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(Special E), pages 73-82, September.
  2. Afia Malik, 2012. "Power Crisis in Pakistan: A Crisis in Governance?," PIDE Monograph Series 2012:4, Pakistan Institute of Development Economics.
  3. Shaikh, Salman, 2014. "Tax Increment Financing in Pakistan," MPRA Paper 53801, University Library of Munich, Germany.
  4. Shaikh, Salman, 2013. "Global Competitiveness: Challenges & Solutions for Pakistan," MPRA Paper 53796, University Library of Munich, Germany.
  5. repec:pid:wpaper:2012:4 is not listed on IDEAS

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