ABSTRACT

Energy Consumption in a given economy is directly correlated with the economic activity of the country. Pakistan’s final energy consumption has witnessed 87.5% growth from FY-05 to FY-21. The progressive increased final energy consumption has transpired into greater reliance on imported energy fuels, which has increased from 30% in the total energy of FY-05 to 51% in the total energy supplies of FY-21. Resultantly, the enhanced reliance has posed detrimental impacts on the current account and fiscal balance of the country. The local gas reserves of Pakistan are depleting at the rapid pace. The production of local gas has witnessed a decrease of -0.80% (CAGR) during the period of FY 2011-2021. At the same time, the demand has witnessed an increase of 2.40 % (CAGR) over the same period. This has resulted in the progressively higher share of RLNG in the gas mix, resulting in greater exposure to current account imbalance and rising circular debt on account of diversion of expensive RLNG to the domestic consumers at subsidized rates. At the same time, the electricity demand in winter falls by 60% of the respective peak demand in summer. This provides an intrinsic opportunity for the electrification of the existing and future’s domestic cooking and heating demand for electricity-based appliances. The study assesses the prospective of the electrification of cooking, space heating and water heating demand for different consumer categories of gas sector. The study has formulated four scenarios based on different gas slab of domestic consumers and assesses the net impact on the consumer’s affordability, current accounts, fiscal subsidies and carbon emissions. The results indicate the positive externality of the proposed transition by means of reduction of the net emissions as well as reduced burden on the current and fiscal accounts. At the same time, the findings also demonstrate that the existing applicable tariffs of electricity and gas sector for domestic consumers are not feasible to give effect to the cost-neutral transitions for different slabs, however, the same may be effectuated by the series of interventions in both the gas and electricity sectors which have been mentioned in the respective sections.