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An empirical analysis of energy shortage in Pakistan

Author

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  • Mubashir Qasim

    (PhD candidate, Department of Economics, Waikato Management School, University of Waikato, Hamilton 3216, New Zealand)

  • Koji Kotani

    (Professor, Kochi University of Technology, Department of Management, 185 Miyanokuchi, Tosayamada-Cho, Kami-Shi, Kochi 782-8502, Japan)

Abstract

In this paper, the electricity shortage in Pakistan is addressed through an examination of data over the period 1971-2010 with a time-series analysis. The novelty of the study lies in characterizing energy shortages using both an index comprising the demands for electricity, gas and oil, and information on the public electricity supply. This index allows for a simple empirical approach where energy shortages cannot be directly measured as data. The main findings are as follows: first, end consumers adjust their energy demands to prices only in the long run; second, the underutilization of installed power-generation capacity encourages fossil fuel consumption for private electricity; third, an uninterrupted electricity supply could be attained by regulating private electricity generation; and fourth, the relative demand for electricity increases with an increase in real income and then starts to decrease as income increases beyond the threshold of $1,127. Overall, the results of the study suggest that the price adjustment tactics adopted by the Government of Pakistan are not an effective policy to deal with power shortages in the short run. Rather, the Government should focus on improving the utilization rate of installed power plants and on rechannelling the use of oil and gas for public electricity generation. Otherwise, energy shortages will worsen with economic growth in Pakistan.

Suggested Citation

  • Mubashir Qasim & Koji Kotani, 2014. "An empirical analysis of energy shortage in Pakistan," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 21(1), pages 137-166, June.
  • Handle: RePEc:unt:jnapdj:v:21:y:2014:i:1:p:137-166
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    References listed on IDEAS

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    Cited by:

    1. Shahbaz, Muhammad, 2015. "Measuring Economic Cost of Electricity Shortage: Current Challenges and Future Prospects in Pakistan," MPRA Paper 67164, University Library of Munich, Germany, revised 12 Oct 2015.
    2. Shakeel, Shah Rukh & Takala, Josu & Shakeel, Waqas, 2016. "Renewable energy sources in power generation in Pakistan," Renewable and Sustainable Energy Reviews, Elsevier, vol. 64(C), pages 421-434.

    More about this item

    Keywords

    Energy shortage; energy consumption index; electricity prices; oil prices;

    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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