Daily InsightsLand Use and Property Rights

Impact of Gas Crisis on the Industrial Sector of Pakistan

By 23/11/2022 0 Comments

Pakistan is struggling with many challenges in recent times, one of which is the gas crisis. Pakistan’s energy sector is heavily dependent upon imported oil and liquefied natural gas because the production of gas in the country is very low. The power sector is the largest consumer of natural gas, followed by households and industries. As winter is approaching, the natural gas shortage is hitting domestic and industrial consumers. The industrialists fear that the export of textiles will suffer and face restrictions as they are using wood and coal to power their units. The gas crisis is pushing the industries two centuries back and can reduce the export levels to the United States and European Union.

Household consumers of gas are already facing load shedding and finding alternatives to keep their stoves burning. The industry sector is facing the same challenges now, but the economic impact is much higher. There is no option or alternative for the industrial sector as they have to keep their boilers burning, but due to the non-availability of gas and high prices of electricity, they have to switch to wood and coal.  The use of wood and coal will eventually lead to deforestation, and the natural resources will start to deplete soon. Also, it adds to environmental pollution. It could put exports at risk as foreign countries are very particular about climate change and prefer exporters who follow the regulations. According to research, around 50-70 industries in Karachi use coal and around 150 industrial units use wood as fuel.

To stop using these resources, the industries have to reduce their capacity by 50% leading to a reduction in exports. It will negatively impact the economy as the current account deficit will decrease while imports will increase. Alternate methods, such as renewable energy resources, must be used to fill the gap. Exports must be prioritized and invested in as they run the economy of Pakistan. Without exports, the country will face a dollar shortage and devaluation of the currency. The exporters of Karachi alone contribute 54% to the country’s total exports, and they must be supported, otherwise, the gas crisis will further exceed, resulting in more challenges for Pakistan and its industrial sector.

Leave a Reply