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Monday January 30, 2023

Let’s conserve energy

January 13, 2023

The endless spiral of import bills burgeoning the fiscal deficit of Pakistan is leading to somewhat draconian measures by the government, which one may argue are needed to address the import bill crisis.

As the concerns for default looms over the country due to debt obligations, the speculations around it discourage investors from taking a risk tolerance view on the country. This leads to a tight labour market and slowed business growth. Therefore, it becomes pertinent for the government to manage fiscal outlook by either increasing revenues or cutting down expenses.

Given that the energy sector accounts for the highest expenses, it is understandable that the government routinely intervenes in this sector to reduce its expenses for a net positive outlook on the economy. However, it is also the most difficult sector as it not only comes with a political cost for the ruling party but also disturbs the country’s growth.

The Pakistani government recently devised a national contingency energy-saving plan aimed at conserving energy and reducing the import bill to deal with the incumbent energy crisis. The plan mainly focuses on reducing imported fuel by reducing energy demand.

The plan has already been approved by the PM Office, and is expected to be approved by the federal cabinet, where provincial chief ministers are also invited to get broader political buy-in on this plan.

These government-backed interventions include the adoption of the hybrid work model, removal of duties on e-bikes manufacturing, establishment of EV charging infrastructure, partial closure of street lights, solarization of public buildings, and reduction in electricity theft. In addition to these measures, the plan also includes public awareness campaigns pertaining to energy and water conservation, which will be actively pursued over social media and TV.

Initial estimates by the government suggest that these interventions will save over Rs250 billion. This is equivalent to approximately $1.11 billion – same as the latest instalment by the IMF. However, this amount is quite meagre against the enormous import bill of $80 billion. Additionally, some activities have social and economic costs associated with them. It becomes important to be aware of all the concerns pertaining to these interventions.

The call for the early closure of commercial activities may have some positive impacts. But it can also disrupt normal business operations. Businesses may need to adjust their staffing levels or schedules to accommodate the earlier closure times, which could have costs associated with it. These policies can also influence consumer behaviour as people may adjust their shopping or dining habits in response to the new operating hours. This could potentially impact the overall demand for certain products or services. In some cases, these policies may lead to job losses or reduced economic activity, while in others they may create new opportunities or stimulate economic growth.

Reintroducing remote working regulations is a good step. One benefit of the hybrid work model is the potential to conserve energy by reducing the number of people commuting to and from work. This can help reduce the demand for transportation fuel and decrease the country’s import bill. Also, working from home can also reduce the energy used for running lighting, heating, and cooling systems in office buildings. However, it is important to note that remote working can also have negative impacts on energy conservation. For example, employees may use more energy at home to power their computers and other equipment, offsetting some of the energy savings from reduced office usage.

The policy of discouraging the import and manufacturing of inefficient equipment – lights and fans – can have a significant impact on energy conservation in the country. This could potentially impact the overall demand for certain products or services by influencing consumer behaviour, as people may be more inclined towards purchasing more energy-efficient models. However, these policies may also have a negative effect on the light and fan manufacturing industry as well as the businesses that import and sell these products. Some companies may need to adapt to the new requirements or face financial penalties, which could have a negative economic impact.

Another government decision relates to partial closure of streetlights. Street lighting can be a significant source of energy consumption, particularly in urban areas. Reducing the use of these lights can lead to significant energy savings. However, it is important to note that partial closure of streetlights can also have drawbacks, particularly if it leads to reduced safety or security. For example, if streetlights are turned off in certain areas, it may be more difficult for pedestrians and drivers to see, increasing the risk of accidents or crime. Therefore, it is important to carefully consider the potential impacts of such a decision and develop strategies to mitigate any negative consequences.

Overall, these interventions can be a useful strategy for reducing energy consumption and costs, but it is important to develop strategies to minimize their negative consequences. By taking a balanced approach, it is possible to achieve energy conservation benefits while also maintaining the associated social and economic costs at acceptable levels.

The writer works at an Islamabad-based energy think tank.

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