Pakistan Energy Crises: Determinants and Consequences

Abstract

The basic objective of this study is to discuss the energy crises in Pakistan, Energy or the power sector of any country is the backbone upon which whole of the economy is standing. Now a day when everything is operated on electricity, energy proved to be the major need. Without electricity there is no life, from offices to households and from shops to industries. Therefore, energy plays an important role in the working and stabilizing of any country. The number of the variables used in this study are electricity production, and other determinants of the electricity i.e gas, coal, petroleum products and oil production, GDP, industrial growth rate, and consumption of the electricity in different sector of the economy in Pakistan. The bound testing approach to cointegration and error correction models developed within ARDL framework by using data from 1990 to 2012 in order to analyze the cointegration among the variables. To check the stationary of variables the Unit root test is used at the difference 1 or sometime 2. In long run gas production raise the electricity production, the consumption of electricity in household sector raises the GDP, consumption of electricity in industry increases the industrial growth rate in the long run. Also, the inflation and GDP raise the agriculture growth rate in long run. The coefficient gas and oil shows rise in electricity production in short run, the coefficients GDP and consumption of electricity in agriculture raise the agriculture in the short run.