CSS Current Affairs | Role of Private Sector Investment in Solving Energy Crisis
The following question of CSS Current Affairs is solved by Dr. Adnan Adam under the supervision of Howfiv’s Pakistan Affairs and Current Affairs Coaches. She learnt how to attempt 20 marks question and essay writing from Sir Syed Kazim Ali, Pakistan’s best CSS and PMS English essay and precis teacher with the highest success rate of his students. This solved past paper question is attempted on the pattern taught by Sir to his students, scoring the highest marks in compulsory and optional subjects for years, and uploaded to help aspirants understand how to crack a topic or question, how to write relevantly, what coherence is, and how to include and connect ideas, opinions, and suggestions to score the maximum.
Outline
1- Introduction
2- Critical overview of Pakistan’s energy crisis
- ✔ Case In Point: According to the Economic Survey 2022-23, 61% of thermal energy is used for power generation, which comprises 80% of imported coal and furnace oil.
3- How does private sector investment play a crucial role in solving Pakistan’s energy crisis?
- ✔ Developing robust infrastructure in accordance with modernized technology
- Case in point: The Copelouzos Group, one of the largest infrastructure investors of Greece, has invested in the Elica interconnection undersea power cable between Egypt and the Attica region of Greece, transfering 3 gigawatts (GW) of wind and solar energy.
- ✔Financing in renewable energy projects for clean and green energy supply
- Case in point: The Khavda Renewable Energy Park, built by Adani Green Energy Limited (AGEL) is capable of producing 81 billion units of electricity that equals the whole electricity supply of Belgium, Chile, and Switzerland.
- ✔Bringing innovation and efficiency in the energy sector
- Case in point: In Australia, a French company, Neoen, has built the world’s largest lithium-ion battery, the Tesla Big Battery, to provide stability to grid stations, support the integration of renewable energy, and reduce the cost of grid stabilization services.
- ✔Curtailing the menace of circular Debt in the energy sector
- Case in point: The clean energy investment through the private sector is the top driver of China’s economic growth, contributing US 1.6 trillion dollars to China’s economy in 2023.
- ✔Forging public-private partnerships
- Case in point: The Noor Ouarzazate Concentrated Solar complex was developed under a public-private partnership in Morocco, generating power for more than one million Moroccans.
4- Critical analysis
5- Conclusion
Answer to the Question
Introduction
The robust energy sector holds the key to achieving the aspirations of rapid industrialization and technological advancement for a country. Ironically, Pakistan has been trapped for decades in the menace of energy crises for several reasons, such as outdated infrastructure, unfavourable agreements with independent power producers (IPPs), lack of innovation and evidence-based solutions, and short-term policy-making for political gains. As a result, the local industry is downsized, circular Debt is increasing, transmission line losses are increasing, and living standards are being reduced. According to the Economic Survey 2022-23, the annual capacity payment is projected to soar to an unsustainable level of 1.5 trillion rupees over the next two years. However, private-sector investment fosters the making of high-tech infrastructure, renewable power plants for clean and green energy, reliable and sustainable power supply for industrial growth, and long-term policy-making to meet the future demand for energy supply. Therefore, in achieving sustainable power in Pakistan, the major stakeholders of the energy sector should take some vigilant measures to provide a conducive regulatory framework for the private sector to ensure investment in the energy sector.
Critical overview of Pakistan’s energy crisis
Pakistan has been facing frequent domestic blackouts and a shortfall of power to meet the required demand of the industrial sector, which hampers economic growth. Moreover, Pakistan’s dependence on imported fossil fuels for power generation has further exacerbated circular Debt in the energy sector. According to the Economic Survey 2022-23, 61% of thermal energy is used for power generation, which comprises 80% of imported coal and furnace oil. However, Pakistan has enough potential for renewable energy resources to fulfil its surging energy demand; short-term policy-making without efficient technology has become a bone of contention for Pakistan, both socially and economically. Thus, there is a dire need for the government and think tanks to address the menace created by the power shortage and to tempt private sector investment in the energy sector to become self-sufficient.
Role of private-sector investment in solving Pakistan’s energy crisis
- ✔Developing resilient infrastructure for reliable power supply
Pakistan has outdated infrastructure and low-standard transmission lines, resulting in an unsustainable power supply. Moreover, it is more susceptible to costly line losses and frequent power outages. In this regard, the private sector would bolster Pakistan’s energy sector by investing in infrastructure upgrades to make it resilient to line losses and extreme weather events. As a result of robust infrastructure with modernized grid stations, distribution companies would become self-sufficient for reliable power supply. Evidently, the Copelouzos Group, one of the largest infrastructure investors in Greece, has invested in the Elica interconnection under-sea power cable between Egypt and the Attica region of Greece, transferring 3 gigawatts (GW) of wind and solar energy. Therefore, the private-sector investment reinforces the installation of well-equipped infrastructures that generate power more efficiently.
- ✔Financing in renewable energy projects for clean and green energy supply
With the rise of global temperature due to the overproduction of fossil fuels, the world is evolving towards renewable energy resources for power generation. On that account, the private sector would foster the development of renewable energy projects to lessen Pakistan’s dependence on imported furnace oil and RLNG, generating cheap electricity to meet the surging demand for power supply. For instance, the Khavda Renewable Energy Park, built by Adani Green Energy Limited (AGEL), is capable of producing 81 billion units of electricity, which equals the whole electricity supply of Belgium, Chile, and Switzerland. However, there are several solar and wind corridors in Pakistan that are capable of generating cost-effective and reliable electricity. Therefore, the private-sector investment in these untapped areas would result in a positive outcome producing clean and green energy.
- ✔Bringing innovation and efficiency in the energy sector
As the world is marching towards rapid industrialization, innovation with sophisticated technology is a need of the hour for the energy sector. However, the private sector holds the key to bringing essential innovation with an efficient workforce to replace primitive mechanization and usher research and development in energy storage applications, ensuring a sound energy sector in Pakistan. Distinctly, in Australia, a French company known as Neoen has built the world’s largest lithium-ion battery, the Tesla Big Battery, to provide stability to grid stations, support the integration of renewable energy, and reduce the cost of grid stabilization services. For that reason, private-sector investment would bring innovative technology in accordance with the global standard, which amplifies the production of cost-effective electricity.
- ✔Curtailing the menace of circular Debt in the energy sector
On one hand, the countries that are self-sufficient in energy generation have had remarkable success in the era of industrialization.On the other hand, for the last few decades, Pakistan has been entangled in the vicious cycle of circular Debt in the energy sector, resulting in high-cost electricity to the consumers. Rationally, the private sector investment in generation and distribution companies has become crucial in the revival of the energy sector, easing the financial pressure on these state-owned enterprises for organized and efficient management of the energy sector. For example, clean energy investment through the private sector is the top driver of China’s economic growth, contributing US 1.6 trillion dollars to China’s economy in 2023. Hence, private-sector investment holds key significance for Pakistan in mitigating its energy crisis and boosting its economy.
- ✔Forging equitable public-private partnerships
Public-private partnerships are considered pivotal for cost-effective energy generation. In fact, these partnerships promote balanced benefit and risk-sharing mechanisms to ensure equitable working in the energy sector. For example, the Noor Ouarzazate Concentrated Solar complex was developed under a public-private partnership in Morocco, generating power for more than one million Moroccans. However, Pakistan’s agreements with independent power producers (IPPs) have backfired, resulting in the default of the energy sector. Therefore, more feasible and fair private-sector participation is needed in the energy sector to flourish.
Critical analysis
Critically, private-sector investment is an instrumental key for the long-run energy sector. Moreover, the investment in research and development would lead to the creation of state of the art technologies, paving the way in deploying renewable power plants. Although Pakistan is capable of producing cheap and environmentally-friendly renewable energy, it needs essential capital to drive evidence-based solutions for the organized working of the energy sector.
Conclusion
In conclusion, the significance of the energy sector cannot be taken for granted because it drives the country’s economic wheel. Similarly, the private-sector investment enables equipment of high-tech infrastructure and creation of innovative power plants for the production of economical energy. As Pakistan is facing a dilemma of energy crises in the form of down-sizing of industry and domestic power-shortage, policy-makers should take some decisive measures to ensure private sector investment in the energy sector.
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