ISLAMABAD, June 4 Energy shortages caused a loss of more than two per cent of GDP to the national economy during the current fiscal year, according to the Economy Survey 2009-10 released on Friday.

“The energy sector severely constrains Pakistan's economy in 2009-10 amid a sharp rebound in international oil prices which puts enormous upward pressure on the cost structure in the power generation and transport sector.”

The survey says the country faced a complex situation in the energy sector as lower availability of hydel generation and higher than normal shortage of gas distorted the fuel mix of electricity generation. The two-fold surge in international oil prices significantly increased the cost of power generation.

“The constant resurgence of circular debt in the power sector added stress on the economy,” the survey says.

Despite hefty increases in electricity tariff over the past two years, there was still a gap of 30 per cent between average generation cost and recovery of bills by distribution companies. “This imbalance is the root cause of the circular debt.”

The survey says that installed capacity of electricity increased to 20,190MW during July-March 2009-10 from 19,780MW last year, but the overall power consumption declined by 1.7 per cent during July-March over the same period last year.

Over the past 10 years (1999-2009), the consumption of petroleum products has increased by an average of 0.5 per cent per annum. The consumption of gas, electricity and coal has increased by 6.8 per cent, five per cent and 12.5 per cent, respectively. The trend suggests that the composition of annual energy consumption is shifting from petroleum products to other energy sources.

However, the energy consumption in all sources witnessed a negative growth during 2008-09 mainly because of lower economic activity and circular debt problem.

Petroleum products supplies to the energy sector during July-March 2009-10 increased to 16.3 million tons from 14.2 million tons during the same period last year. The increase was mainly because of a lack of adequate power supply and the industry used more generators because of the prolonged loadshedding.