Central Data Catalog

Citation Information

Type Report
Title Pakistan: Household Use of Commercial Energy
Publication (Day/Month/Year) 2006
URL https://openknowledge.worldbank.org/bitstream/handle/10986/17965/ESM3200PAPER0P1cial0energy01PUBLIC1​.pdf?sequence=1
The energy sector in Pakistan has undergone a number of changes in the
last decade. In the downstream oil sector, the government shifted to a formula-based
pricing policy for petroleum products, although this policy was reversed in 2004 and
2005 against the backdrop of steeply rising international oil prices. The Oil and Gas
Regulatory Agency has been established, setting prescribed rates for natural gas and
conducting public hearings. In the power sector, several reform steps have been taken,
among them reducing the generation capacity shortfall and improving bill collection.
These measures affect the availability of energy as well as the prices charged to, and paid
by, consumers.
2 This study aimed to examine the impact of changing availability of
different energy sources and their price levels on household energy choice, consumption,
and expenditures. Knowledge of household expenditures and energy consumption
patterns is an essential building block for further work on possible policies in the energy
sector and associated poverty and social impact analysis. To this end, the four most recent
household expenditure surveys—conducted in 1994, 1997, 1999, and 2001—were
analyzed in detail. The survey periods included those with low fuel prices (1999) and a
time of rising world oil prices (2001). No household expenditure surveys are available
from the last two years, when the increase in fuel prices has far outstripped general
inflation. Nevertheless, between 1994 and 2001, prices of electricity, natural gas,
kerosene, and liquefied petroleum gas (LPG) rose more rapidly than the consumer price
index (CPI), potentially offering insights into how households might react to, and manage,
sharply rising energy prices. The household survey analysis was supplemented by focus
group discussions and individual interviews conducted in 2004 and 2005. Participants
were asked questions about reasons for energy choice, the quality of service provided,
evidence of increasing competition, affordability of different energy sources, benefits and
costs, and commercial malpractice.
3 Many findings in this study were consistent with international experience,
while others were somewhat surprising:
• Access and uptake. Uptake of electricity, natural gas, and LPG increased
with time in both absolute and percentage terms, indicating that increasing
access outstripped the population increase. As in other countries, the rate
of uptake rose with increasing income for these three energy sources. In
the case of LPG, the uptake rate fell for the bottom 10 percent between
1994 and 2001. For electricity and natural gas, the uptake rate increased
across all income groups.
• Price increase and affordability. Prices of electricity, natural gas,
kerosene, and LPG rose faster than the CPI between 1994 and 2001.
Households appeared to consider natural gas affordable. Kerosene is
apparently becoming too expensive, and many households have dropped it
from their energy portfolio. In response to rising prices of commercial energy, the uptake of free biomass increased slightly from 1994 to 2001 in
both urban and rural areas. The largest percentage increase in the uptake
of free biomass occurred among the bottom 40 percent in urban areas.
• Consumption. Consumers did not cut back on their consumption of
electricity and natural gas, but they did cut back their LPG and kerosene
consumption. Consumption of fuelwood increased, especially among
those making use of freely acquired fuelwood.
• Energy mix. The most dominant household energy mix changed from
kerosene-biomass-electricity in 1994 to biomass-electricity in the
subsequent survey years. Natural gas-electricity, undoubtedly the top
combination in the so-called energy ladder, moved from being the fourth
most prevalent energy mix in the first three surveys to the second in 2001.
These findings are detailed below.

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