Pakistan needs massive investment in energy infrastructure

Pakistan needs massive investment in energy infrastructure as the country endures one of the region’s highest numbers of power outages, causing heavy losses to industry, said the Asian Development Bank (ADB) on Tuesday.

The ADB, in a report, said Pakistan faces 31 power outages in a typical month – a little better as compared to 51 in Nepal and 65 in Bangladesh.

“On average, firms in developing Asia experienced slightly more power outages than those in other developing countries,” the Manila-based lender said in the report, ‘Meeting Asia’s Infrastructure Needs’. “While actions have been undertaken by some countries, (yet) considerable investment will be needed in the short to medium terms to make the power sector greener through reducing emissions and switching to renewable energy.”

The Bank said developing Asia, consisting of 45 developing member countries, will need to invest $26 trillion over the 15-year from 2016 to 2030, or $1.7 trillion a year on transport, power, telecommunications and water supply and sanitation.

It said Pakistan had one of the region’s lowest electricity generation capacities per capita over the past one decade. Contrary to an average 7.4 percent growth rate in Asia, the country’s power production remained flat between 2000 and 2012.

“Developing Asia’s electricity generation capacity per capita, a key indicator to measure the power infrastructure of an economy, grew at a rapid average of 7.4 percent annually between 2000 and 2012; yet it remained slightly below the average for other developing economies and substantially below the OECD (the Organisation for Economic Co-operation and Development) average,” it added. A report’s graph showed that Pakistan’s electricity generation capacity and its annual growth stayed at below zero percent similar to Afghanistan during the period between 2000 and 2012.

When it comes to water supply infrastructure, only 0.4 percent of the country’s population in rural areas has an access to piped water, while villages have also poor sanitation facilities. The ADB acknowledged that the country considerably invested in sanitation facilities and observed a substantial growth in the coverage.

“However, the region as a whole (52 percent) still lags far behind the OECD level (96 percent),” it said. “Among those with large rural populations, India, Indonesia, and Pakistan, for example, had rural access to sanitation below 50 percent, which means a significant amount of rural residents are still suffering from the adverse impacts of lack of sanitation.”

The Bank said infrastructure investment from private sector in Pakistan stands at 30 percent of gross fixed capital formation despite “the importance of private infrastructure investment is less in India and Pakistan.”

A report’s table showed that private sector investment in infrastructure is over two percent of GDP in Pakistan, more than the ratio in Malaysia, Bangladesh and Thailand.

In China and India, these ratios are nearly seven percent and more than five percent, respectively. ADB said Pakistan needs substantial fiscal space for growth-enhancing priority spending on infrastructure.

The country also needs to firmly reduce public debt as it remains vulnerable to shocks, while additional tax measures are needed to realise full revenue potential of 2.2 percent of GDP by 2019/20.