Page 27 - CMA Journal (May-June 2025)

Power Shortages and Rising Production Costs in Pakistan:

Focus Section
Role of CMAs in Business Sustainability

Pakistan’s industrial and commercial sectors have long when demand spikes,
faced the problem of power outages. Persistent, gas supply to indus-
unscheduled power outages are now threatening the tries is typically
survival of businesses. These blackouts of electricity and curtailed, placing a
gas across the country—especially in key cities and strain on business
industrial zones—have not only disrupted operations operations. Addition-
but also increased production costs due to alternative ally, the rising cost of
arrangements made with limited resources. The profit gas has become a
margins of industrial and commercial sectors have been critical issue. The shift
squeezed further in recent years, pushing many from domestic natural
companies toward closure or relocation outside Pakistan. gas to expensive
imported RLNG has
The objective of this article is to analyze the impact of Jawad Ahmad, ACMA
nearly doubled gas
power shortages on rising production costs and business Senior Risk Officer
prices for both
sustainability risks, and to suggest how professional Sui Northern Gas Pipeline
businesses and
accountants—particularly Chartered Management Limited (SNGPL)
consumers.
Accountants (CMAs)—can help mitigate these risks
through strategic planning, cost minimization, and Due to governance-related issues and the scarcity of
energy risk management. indigenous energy reserves, Pakistan's dependence on
imported, expensive LNG and oil is increasing, putting
Understanding Business Sustainability in
pressure on foreign exchange reserves. This reliance can
the Pakistani Context lead to supply chain disruptions and higher energy costs.
Business sustainability is not just about profitability; it Lacking a comprehensive subsidy framework or energy
means that a company operates in a way that ensures efficiency incentives, it is nearly impossible for most
long-term economic performance, environmental businesses to maintain healthy profit margins.
accountability, and social fairness. However, in Pakistan,
sustainability programs are frequently undermined by Percentage Share of Pakistan’s Energy Mix
external factors such as economic volatility, governance
issues, infrastructural deficiencies, and energy crises. Energy Source Installed Percentage (%)
(MW)
Share
Regular load-shedding, gas shortages during winters,
and rising tariffs have created an unstable business Hydel* 10,251 24.7
environment. This instability leads to higher operating RLNG** 9,884 23.8
expenses, disrupted production cycles, missed export RFO 5,958 14.3
targets, and reduced foreign direct investment (FDI) Coal 5,332 12.8
compared to other countries in the region.
Gas 3,536 8.5
Challenges in the Energy Sector Nuclear*** 3,647 8.8
Wind**** 1,985 4.8
Pakistan’s power sector is the backbone of its economy and
provides a critical service. However, it has hindered econom- Solar 600 1.4
ic growth due to outdated infrastructure, poor governance, Bagasse 364 0.9
inadequate long-term planning, fuel supply shortages, and Total 41,557 100.0%
limited access to financing. These challenges have led to [Source: Ministry of Energy (Power Division)
frequent and prolonged power outages and load-shedding *Karot Hydel Power 2 Units of 360 MW Capacity are running on Commissioning
across the country. test and are included in Installed Capacity.
**All KE power plants are operated on Indigenous gas and RLNG as the same is
In the gas sector, distributing indigenous gas to commer- supplied by SSGC on co-mingled basis.
cial, industrial, and residential consumers remains a ***Supply from KANUPP was discontinued from August 2021.
****Two Wind Power Plants 100 MW Capacity are running on Commissioning test
major challenge for SNGPL and SSGC. During winter,
and are included in Installed Capacity.
ICMA’s Chartered Management Accountant, May-June 2025 25