Energy is the single most important input for socio-economic development and prosperity. It is the basic requirement for driving the engine of growth up to the desired level. This is the reason that the rapidly growing developing economies like China, Russia and India are doing everything possible to increase their energy supply. According to some estimates, the country's demand for electricity by the year 2015 will be nearly 22 per cent greater than the anticipated supply. By 2030 the energy deficit will be 64 per cent. These are threatening figures, especially when the share of coal in the energy mix is not going to increase in the near future due to non- exploitation of this vast resource.

To overcome the acute energy problem there is no other option but to undertake some big initiatives to address the deepening socio-economic hardships by optimal utilization of indigenous resources, such as hydel, coal etc. A well-defined strategy and a need based development initiative for the power sector would help to reduce the energy shortages, tackle economic problems and improve the socio-economic conditions of the people.

The constant load-shedding is hampering economic recovery and social stability. The present initiatives of the government and private sector to address the energy crisis are being termed as inadequate by many energy experts. The government is, however, trying to address the problem through building new dams and purchasing expensive rental power plants from abroad. These power plants are very controversial and there is no certainty as to how effective they would be in easing the energy crisis.

If the government fails to address the energy issue, the country will face even more problems in the coming days. Regular and prolonged power cuts mean that the industrialists will not be able to meet their production targets and farmers' agricultural productivity will decline. This will lead to lower than targeted export earnings and will have a severe impact on the GDP level. The contribution of electricity and gas generation to GDP growth for 2009-10 has already displayed a declining trend, indicating a worrisome sign that the country is heading towards the most severe crisis on these two accounts.

The private sector investment in electricity and gas on the other hand, has also registered a declining trend of negative 18 per cent while it nose-dived by 3 per cent for attracting public sector investment in 2009-10. The gross value added in electricity sector at constant prices witnessed a steep decline by negative 23.7 per cent in 2009-10, compared to the previous year. The total contribution of electricity, gas and water supply to GDP growth stood at a meager level of 0.4 per cent in 2009-10.

Export-baseindustrial units are facing a 15 per cent increase in the cost of production because of load-shedding. According to some industrialists export-oriented factories are enduring continuous power cuts for 5-6 hours a day.

On the other hand, the government is increasing electricity tariffs for industries after every two months. Furthermore, Pakistan Electric Power Company (Pepco) has fixed the line rent for industries at Rs0.2 to Rs0.3 million and the industries have to pay the rent no matter what.

It is believed that the country will need at least $14.5 billion investment in the energy sector in the next 10 years. As per power experts electricity demand will continue to increase in the next 20 years, while the overall cost to the economy would continue to surge unless there is a concerted shift in policy and consumption pattern. The government has planned to introduce energy-efficient cooking, heating and environment-friendly housing technologies in collaboration with the United Nations Development Programme (UNDP), Agha Khan Foundation, Pakhtunkhwa government, Northern Areas and some environment and development agencies. If the pilot project is found to be successful it would be extended to other areas of the country as well. Conservation of electricity and gas through energy efficiency would be a major success if effectively implemented. The project will be completed in four years and benefit almost 32,000 households.

Energy-efficient heating instruments and promotion of environment-friendly techniques is expected to reduce CO2 emissions from eleven to five tons per household annually. It will also reduce respiratory tract infections and other illnesses caused by in-house smoke. The project will further contribute to strengthening household economies by cutting expenditures on fuel wood and the money used for treatment of illnesses. The government is also planning to tap the sugar industry's resources and to generate around 3,000 megawatts during the next five years to meet power shortages in the country. This will help in reducing the import bill of furnace oil by $980 million per annum. However, all these plans need to be implemented as early as possible.

More concerted efforts should be made to attract foreign investors in this vital sector. The allocations of Public Sector Development Programme (PSDP) for the sector should be fully utilized without any delay. Corruption and inefficiency related losses need to be minimized if not eliminated. Furthermore, the electricity dues of Water and Power Development Authority (Wapda) and other power generation companies need to be cleared on a priority basis. Wapda is facing a shortage of funds for executing its development projects. It has emerged as the largest creditor to Pepco, which owes it Rs75 billion on account of hydropower supply. The outstanding amount against Pepco was Rs40 billion in October 2009 which increased by Rs35 billion in the last four months.

Wapda's financial woes have been further compounded by its inability to raise funds through Sukuk bonds because its assets are already locked in the Rs48 billion Sukuk it floated for Pepco. In other words, besides the Rs75 billion dues, Pepco is also indebted to Wapda for the amount it got against floating Islamic bonds.