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Energy crisis pushes economy into lowest growth cycle

The energy shortage has been one of the major factors causing Pakistan’s economy to under perform its regional peers as the country has gone through its lowest GDP growth period averaging 3.04 percent in the last five years against 65-year average of 5 percent.

The recently released economic survey estimated cost of power crisis to the economy is approximately Rs380 billion per annum accounting for 2 percent of the GDP.

Country’s gas consumption during nine months of the current fiscal year rose by 2.0 percent to 3,494 mmcfd as against 3,431 mmcfd in the same period last year, while gas production improved by a decent 5.0 percent to 4,236 mmcfd as against 4,050 mmcfd in the same period last year.

“The trend is indicative of increased unaccounted for gas losses which imply inefficiency creeping in the gas distributing companies,” said Nauman Khan at Topline Securities. “Sectoral consumption reveals that gas consumption in the transportation sector (CNG) rose by 11 percent with its weight-age in the overall pie increasing to 9.4percent.”

Household consumption rose by 10 percent, while its share increased by 19.8 percent to 21.5 percent, given government’s inclination to give priority to this sector due to lack of alternatives.

On the other hand, general industry and fertiliser, that consumes 40 percent of the available supplies, were faced with reduced gas supplies.

Their consumption declined by 7 percent and 5 percent, respectively.

Gas supplies to power sector increased by 4 percent in order to improve low-cost electricity generation instead of relying on expensive furnace for power generation especially at time when energy firms are facing liquidity crunch.

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