Page 28 - CMA Journal (May-June 2025)

Focus Section

margins. When these costs cannot be
Local vs Imported POL Products
passed on to customers, net profits
25.00 decline further.
20.00 6.83 10.18 g) Strain on cash flows: Higher utility
Million Tonnes 15.00 8.50 13.98 13.98 bills, fuel expenses, and generator
maintenance lead to increased cash
10.00
5.00
industries already operating on thin
0.00 10.08 outflows from operating activities. For
2021 2025 2030
margins, this can result in liquidity
Local POL Imported POL
stress.
(Source: IEP Database [2006–2020] and the author’s calculations)
h) Diversion of capital investment:
Future Primary Energy Supply for Gas (Million CFt) Companies are compelled to invest in
capital assets such as solar panels,
Supply 2020 2021 2025 2030
Net Supply 982,089 942,156 767,392 593,793 batteries, or diesel generators. These
Imported LNG 318,241 477,776 669,670 952,680 investments, while necessary, divert
Primary supply 1,300,330 1,419,931 1,437,062 1,546,473 funds that could have been used for
innovation or business expansion—
(Source: EYB 2020 and author's calculations)
resources that would otherwise be
LNG Import 2020–2030 available if affordable energy were
accessible.
1921
1,800
1,600 Regional Comparisons and
MMCFD 1,200 1005 1006 1058 1116 1177 1237 Lessons Learned
1,400
1,000
Bangladesh, Vietnam, and Malaysia offer
800
600 strong examples of how energy efficiency
400
200 and targeted subsidies can drive industrial
0 development. Bangladesh’s success in
2020 2021 2022 2023 2024 2025 2030
expanding its natural gas grid—with
(Source: EYB, 2020 and the author’s calculations based on the peak demand for natural gas)
support from foreign donors and strict
regulatory oversight—demonstrates the impact of
Role of Power Shortages in Increasing
Production Costs political will and effective planning. Similarly, Malaysia
has emerged as a regional leader in sustainable
The power shortage in Pakistan is not just an production by promoting solar energy adoption through
inconvenience for companies—it is a structural barrier to
financial incentives and tax credits.
growth. Additionally, transmission and distribution (T&D)
losses and the accumulation of circular debt have further Pakistan can draw valuable lessons from these
experiences by:
aggravated the situation, leading to increased power tariffs.
• Establishing an independent energy efficiency
From an industrial perspective, the impact of power
agency
shortages includes the following:
• Promoting domestic production of energy-efficient
a) Increased reliance on alternative energy sources:
appliances
Most industries depend on costly and environmentally
harmful diesel or furnace oil generators. • Collaborating with international financial institutions
to secure low-interest green energy loans
b) Inefficiency and downtime: Load-shedding leads
to production delays, reducing overall output and The Case for Policy Reform and
efficiency.
Public-Private Partnerships
c) Wage inefficiencies: Labor costs are incurred even
Sustainable energy solutions require collective action.
during non-productive hours caused by outages, While businesses must streamline internal operations,
resulting in lower productivity per wage unit.
the government needs to implement reforms in pricing
d) Equipment wear and tear: Frequent disruptions structures, subsidy frameworks, and infrastructure
and voltage fluctuations pose risks to sensitive investments.
machinery and equipment.
Public-Private Partnerships (PPPs) can play a critical role
e) Disruption of the supply chain: Energy shortages in advancing renewable energy projects, LNG terminals,
lead to inconsistent production schedules, causing and grid modernization. Similarly, targeted subsidies or
shipment delays and declining customer satisfaction.
financing schemes for energy-efficient equipment can be
f) Higher energy costs: Increased costs of goods sold transformative—especially for SMEs struggling with high
(COGS) due to energy expenses reduce gross profit operating costs.
26 ICMA’s Chartered Management Accountant, May-June 2025