1. Effects of Load
Shedding on
Industries
2010
11/5/2010

2. PREFACE
This report “Effect on Load shedding on industries” is about the impact of load
shedding on industries.
Our main aim in this report is to identify the strengths, weaknesses, threats and
opportunities, to study the environment, drawbacks, reasons, and solution for
load shedding.

3. LETTER OF TRANSMITTAL
Mr. Sallahuddin,
Course Instructor of Business Law,
BIZTEK
Karachi
Nov 5, 2010
Respected sir,
We here by represent our final report concerning the effects on load shedding
on industries as assign by you as a mandatory part of course.
Hopefully, our report will fulfill its purpose and prove to be beneficial for the
students of business law.
We also hope that the report will be up to your expectations. Any information or
queries regarding this report will be highly appreciated by our team members.
Sincerely,
Raheel Razzak
Sami-ur-Rehman
Abdul Qadeer
Atif Ahmed Sheikh
Abid Ali

4. GROUP PROFILE
We, the group members of the report on “Effects Of Load Shedding on
Industries” are currently doing Masters in Business Administration (MBA)
from BIZTEK.
Raheel Razzak (BME/1173)
Abdul Qadeer (BME/1168)
Sami-ur-Rehman (BME/1172)
Atif Ahmed Sheikh (BME/1167)
Abid Ali (BME/1110)

5. EXECUTIVE SUMMARY
Electricity is in short supply in Pakistan, and as a result electric load shedding, break
downs, power outages, fluctuations, blackouts etc are a common feature in the
country. Whether it is summer or winter, load shedding is there. Some times it is
scheduled, while or other occasions it is totally unscheduled. The letter is the worst
because it causes untold problems and hardships to the electricity dependent
community. It can be confidently said that the electric supply has never been reliable
at any time in Pakistan.
There are many factors behind electric load shedding in Pakistan. These factors
include shortage in river waters, over population, new connections, electric supply to
villages, low generation of electricity, fewer dams, power theft, line losses etc. Then
load shedding is the result of corruption, inefficiency, mismanagement and defective
planning in WAPDA besides incomplete projects like Kala Bagh Dam, misuse of
available resources, no generation from atomic and solar energy, lack of consensus
and the apathy of the government contribute to load shedding.
Load shedding is a great curse. It brings untold misery to people belonging to all
walks of life weather they are students, patients, businessman, industrialists,
farmers, laborers, mechanics, house wives etc. It brings all economic, Agricultural
and industrial progress to a standstill. The fluctuation plays havoc with the electric
equipments like refrigerators, VCRs, Televisions, and Computers etc. The foreign
investors shun investing money in different fields due to load shedding starts a long
episode of helplessness and frustration.
Pakistan can not make progress in any field in the presence of load shedding.
Therefore government should take all possible measures to end load shedding from
the country. First of all it should remove corruption, inefficiency and mismanagement
from WAPDA. New mega dams should be constructed with out further delay. The
present available resources should be developed immediately. Power should be
generated from solar and nuclear energy. Power theft should be should be stopped
forthwith. On the other hand people should make wise and proper use of electricity.

6. They should turn to using energy saving device. No doubt such steps can help a
great deal in ending load shedding from the country.

7. INTRODUCTION
Electricity load shedding in Pakistan has increased manifold. Minister of water and
power Raja Pervaiz Ashraf assured that electricity load shedding would be done
according to time schedule. He assured that electricity load shedding will finish by
the end of the year 2009 but instead it is doubled what it was in the past year 2009. It
is big failure of the government of Pakistan. No country can make progress without
electricity. Recent government measures of holiday on Saturday and other saving
methods have reduced load shedding but not significantly. Here I want to reveal one
big waste of electricity by WAPDA, LESCO and other cities electricity board
employees. One low grade LESCO employee told me that he is getting 2,100 units
free electricity per month. He told that senior officers are getting 7,000 units and
more free electricity per month. So, these employees are getting free electricity equal
to their salaries. All this free electricity is being wasted on numerous air conditioners
or selling to other rich people. Holiday on Saturday is loss for backward Pakistani
nation since already government office procedures are dead slow.
Protests are taking place around the country. People of advanced countries cannot
imagine to live in such circumstances for a single day. I have never seen such a
intense electricity load-shedding during my whole life. Minister of water and power
Raja Pervaiz Ashraf failed to fulfill his promises. Electricity load-shedding is one of
the biggest issues in Pakistan including poverty and unemployment. Government
should take drastic measure to finish this electricity load-shedding. Pakistani nation
is unhappy that government and opposition is busy in other legislative issues instead
of resolving these primary issues. I challenge that I can resolve electricity load-
shedding issue in one year if I become minister or high official of ministry of power.
On February 06, 2010 there was eight hours of continuous load shedding. Such
shutdown takes place one day every week on the pretext of maintenance. Local
LESCO employees told that this shut down takes place from local Grid station. SDO
and XEN never attend their mobiles. There numbers are provided on electricity bills

8. as a joke. Similarly other responsible authorities concerned with load-shedding are
not attending their phones. I talked to PS of LESCO chief executive and suggested
him to suspend such staff who are not fulfilling their duties.
There is another very unjust aspect of electricity load shedding. There is no or less
electricity load shedding in officer’s colonies or in rich posh areas. Always equal
treatment is suggested by all national and international organizations. There must be
equal time of electricity load shedding for every part of Lahore. Further electricity
load shedding is being used as a weapon in order to obstruct people from work. This
type of electricity load shedding happens any time without any time table. Political
parties have joined hand for forming coalition government but people are facing
inexpressible difficulties. Now political parties should work together for the resolution
of important issues like electricity load-shedding and people’s poverty.

9. WHAT IS LOAD SHEDDING
Load shedding is what electric utilities do when there is a huge demand for electricity
that exceeds the generation available. The alternative is to have a brown-out where
the voltage is reduced.
FACTORS OF LOADSHEDDING
There are many factors behind electric load shedding in Pakistan.
• These factors include shortage in river waters,
• over population, new connections, electric supply to villages, low generation
of electricity, fewer dams, power theft, line losses etc.
• The load shedding is the result of corruption, inefficiency, mismanagement
and defective planning in WAPDA besides incomplete projects like Kala Bagh
Dam, misuse of available resources, no generation from atomic and solar
energy, lack of consensus and the apathy of the government contribute to
load shedding.
• KESC deliberately switches off power units to conserve fuel
• Valuable power-generation equipment is protected from being damaged by
excess power demand or "distribution network overload" conditions.
• One most important factor of load shedding is circular debt. The reality of
circular debt is KESC didn’t make payment to WAPDA, and WAPDA didn’t
make payment further……..

10. EFFECTED GROUPS
• social-priority customers - such as hospitals, defence, police, national
communications services and vital manufacturing plants - can continue to be
supplied with power even though non-priority customers - such as normal
domestic homes, offices and shops - may have to be subjected to power
outages during a period of load-shedding
That factory has losses from shutting down its equipment and idling its
workers.
• According to an estimate, there are 10,000 factories in Lahore, among which
approximately 30-40 percent factories have been closed because of load
shedding. These factories were utilizing electricity and Sui gas in a huge
amount. In these factories, plastic molding, rubber articles, leather garments,
cotton, iron-made goods, and many other things were being produced
• According to the labor department sources, approximately 800,000 laborers
have been dispelled from their jobs. While, 400,000 to 800,000 laborers were
receiving less wage. “The owners have finished the overtime facility because
of loadshedding and this was increasing our hardships
• Marriage halls will no longer be able to host all-night wedding parties
• Neon signs and brightly-lit billboards are to be banned
• The prolong load shedding in all four districts of Faisalabad has not only
disturbed the public life but also left drastic impact on industries and
commercial activities. According to details, the load-shedding hour has
reached from 18 to 20 and 20 to 22 in all four districts of Faisalabad division
including Toba Tek Singh, Chiniot, Jhang and Faisalabad. The power looms
factories have closed owing to unscheduled and prolonged load shedding
while hundreds of industries are also going to be closed while, thousands of
labourers have become jobless. Un-scheduled load shedding has left ruinous
impact on Textile and Hosiery industry. The national exchequer has to bear
loss of million dollars when Textile and hosiery industry of Faisalabad
cancelled foreign orders owing to prolong load shedding

11. SUGUESTIONS AND SOLUTIONS
• First of all Government should remove corruption, inefficiency and
mismanagement from WAPDA.
• New mega dams should be constructed with out further delay. The present
available resources should be developed immediately.
• Power should be generated from solar, nuclear energy, wind turbine and
water turbines. Power theft should be should be stopped forthwith. On the
other hand people should make wise and proper use of electricity. They
should turn to using energy saving device. No doubt such steps can help a
great deal in ending load shedding from the country.
• There are many other cases where lots of smaller consumers agree to reduce
demand on hot summer days, such as by reducing air conditioning or lighting.
• In most of the companies and offices, the electricity is consuming highly, as
interior designing in the offices ACs are used instead of general fans and the
fancy lights also used as the interior designing is.

12. ELECTRICITY LOAD SHEDDING IN PAKISTAN
ONLY DUE TO DEFECTIVE POLICIES
The electricity load shedding in Pakistan would have not been a big problem to cope
with but its made much bigger by adopting the defective policies. One of the causes
of load shedding is called the circular debt, which means the private electricity
generation companies keep generating the power but they do not get the money for
the electricity they have provided, in that case they can generate the electricity for
limited period and after that when the outstanding amount to be paid by government
to these companies cross a limit, by being not able to fuel costs these companies
stop the production till they have get paid back by government.
This have been happening very much lately, current approach from government is
they let the circular dept build up and while companies stop production they are paid
back after many months and mean while that halt brings in more shortage and more
electricity load shedding subsequently.
Now this is the place where the issue of rental power plants comes in. The question
is, when you are not able to finance the current infrastructure and when you are not
fully utilizing the current generation capacity, why on earth you need the rental power
plants? – It would have made some sense if the rental power plants would have
have come with low cost electricity but unfortunately other than thinking of paying
back the circular dept and taking all the current resources in action our government
have chosen to bring in the rental power plants. The plants which does not still
started generating the power but we already started paying the rent money.
After carefully reading what’s written above one can decide that the rental power
plants stunt was really not required at the moment. Moreover when you live in
country which is blessed with so much of natural resources why on earth you have to
go for rental power plants. Wind forms and solar energy power plants have got huge
potential in this country which can bring in lots of low cast energy, also if more dams
are planned, we can get much more hydro power.

13. After that come in the coal reserves which is blessing for this nation, we have got the
coal reserves which are in few biggest coal reserves of the world. Research shows
that if we use just 2% of these reserves for power generation we will be able to keep
on generating the extra 25000 Mega Watts of power for next 40 years just from coal
and we just have overall electricity consumption of 16000 Mega Watts country wide
today. 12000 Mega Watts of power out of our 16000 mega watts is already being
generated. The above facts clearly show that if the right policies are adopted we can
not only generate enough power to meet our energy requirements but also generate
power to sell out.
The problems of our country have never been the resources but only and only the
sincere leadership which really cares for the country and all the souls living in it. For
the moment we can just pray to Allah for blessing Pakistan with the leadership which
is sincere and capable of making things happen. Next time when you vote in
elections just think for your country and nothing else, keep the previous experiences
in mind, they will help you much.
CURRENT ISSUES
LAHORE, April 15, 2010 (Frontier Star): Chambers of Commerce & Industry in
Punjab and Trade, Industrial Associations of Lahore have warned that they would
be forced to handover the keys of their premises if the electricity and gas load
shedding are not immediately stopped. Entrepreneurs from all major industrial
sectors and representatives of all major markets of the city at a meeting held at
Lahore Chamber of Commerce and Industry resolved that the selective load
shedding Punjab would no more be tolerated. The meeting was attended by
Presidents of Sargodha, Sialkot and Gujranwala Chambers of Commerce and
Industry, former President Sheikhupura Chamber of Commerce Manzoor Malik, the
representatives All Pakistan Textile Mills Association, Lahore Township Industrial
Association, Ferozepur Road Industrial Association, Pharmaceutical Association,
Steel Furnace Owners, Steel Melters Association, representatives of auto vendors,

14. plastic manufacturers, packaging industries, and all major Lahore Markets.
Attributing the unprecedented power outages the result of incompetence the
meeting asked for removal of all the PEPCO and LESCO officials responsible for
the electricity crisis. The meeting also questioned the wisdom of the government in
granting nine extensions to the MD Sui Northern Pipeline Company and demanded
his immediate removal. They were unanimous that the gas supplies during the
tenure of the present MD SNGPL have been erratic and inconsistent. President
Lahore chamber of Commerce and industry Zafar Iqbal Chaudhry demanded that
PEPCO and LESCO should be privatized immediately. And the new boards should
be constituted in consultation with the private sector so that they could take decision
in collaboration with real stakeholders. He said the government should announce
immediate construction of Kala Bagh Dam
and assured that the entire amount needed for its construction would be provided by
the people of Pakistan. He said that consensus on this issue should be obtained
from all federating units on the same manner as done in case of NFC and 18th
amendment. After passing these resolutions the participants of the meeting staged a
protest march towards Governor House. They were carrying banners inscribed with
slogans against LESCO and PEPCO authorities. Hundreds of entrepreneurs were
joined by over thousand workers of the industries and shops that chanted slogans
against PEPCO, SNGPL and LESCO. The participants also demanded of the
government to expedite work on Neelum-Jhelum, Basha Diamir projects for the sake
of our future generations. They said that they were unable to understand that why
the government was not taking any initiative to put in place alternate electricity
generation projects despite availability of huge coal reserves, vast tracts of Windy
areas and abundant solar energy.

15. LOADSHEDDING IN PAKISTAN GIVES BIRTH TO
NEW COTTAGE INDUSTRY
LAHORE: The unending load shedding was giving rise to a new form of cottage
industry which was producing scores of goods to counter the power outages. Load
shedding, though, has adversely affected the big industries, yet it helped small
industry to grow Small manufacturers, who were actually exploiting load shedding,
are getting handsome amount by making emergency lights, candles, generators,
UPS and many others. The ignored and even dying business of artificial power
sources got strength in the current “era of darkness.” This load shedding crisis
started for a long time ago, this gave birth to the electrical equipments price-hike.
Since that period, the price has not come down and the manufacturers earning
abnormal profits for energy articles. An industry has come into being which was
creating jobs (sort of cottage industry) and has expanded to many homes from
workshop or factory and manual labor has been benefited.
According to an estimate, there are 10,000 factories in Lahore, among which
approximately 30-40 percent factories have been closed because of load shedding.
These factories were utilizing electricity and Sui gas in a huge amount. In these
factories, plastic molding, rubber articles, leather garments, cotton, iron-made goods,
and many other things were being produced.
According to the labor department sources, approximately 800,000 laborers have
been dispelled from their jobs. While, 400,000 to 800,000 laborers were receiving
less wage. “The owners have finished the overtime facility because of loadshedding
and this was increasing our hardships,” said Mubarak, a worker at Band Road.
However, on the other hand, many producers are making Ultra Power Supply (UPS)
of 500-1000w and selling them on various prices ranging from Rs 6,000-12,000.
They claimed that at least two tube lights, two fans, one computer and one TV could
be run, but the price, they are charging, did not include the cost of battery of 48A or
more, which was available in the market at Rs 2,400 to Rs 4,500. Moreover, the

16. battery age was approximately one-year and if the battery spoiled, the consumers
have to bear more charges for its repairing or replacing.
Rashid, a generator dealer said that 2007 has recorded an increase in the prices of
ordinary generator by Rs 2,000 to Rs 5,000 depending on different brands, sizes and
quality. Usually, the China made generators were being used more, as compared to
other imported ones, whose rates were very high.
Saleem, a generator dealer, told The Post that the market was stocked with various
varieties of generators in accordance with their power capacity, some were operated
on diesel, and petrol and some on gas.
It is pertinent to mention here that replica articles have also captured the markets
due to its low price, although there was a serious concern about their quality. Most of
the shopkeepers were selling artificial light gadgets because, they said, the common
people forced them to bring these goods to the markets. But the risk of these
commodities, being a substandard quality, pose a grave risk that it might be
exploded.
In summer season, coolers and fans demand would also rise, especially in schools,
colleges, homes, offices etc. and in case of continuity of loadshedding, the demand
of artificial energy resources would likely to rise.
IMPACT ON ECONOMY
• Load shedding can affect the country's economy. It has an over all effect on
people's life. It slows down the industrialization. It affects commercial
operations as most of the operations are in the evening hour’s effects the
student's studies also.
• Shortage of furnace oil and oil prices is continuously increasing. Due to
continue use of furnace oil in self generation of electricity. (generators)

17. • Load shedding is resorted mainly because of the demand supply gap during
peak hours. the situation can be managed to an extent by the co operation of
the consumers to flatten the load curve. The consumption which can be
shifted from the peak hours to other time slots can ease the situation. And
causing increase in inflation because price is also increasing of good or
commodity per unit 30% to 60%
SUPPLY & DEMAND OF ELECTRICITY IN
PAKISTAN
Supply and Demand of Electricity in Pakistan
Supply and Demand Position: 2008-2020 (MW)
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Existing Generation 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903 15,903
Proposal /
Committed
Generation
530 4,235 7,226 10,115 10,556 13,307 13,520 14,607 16,134 18,448 18,448 18,448 18,448
Total
Existing/Committed
Generation
16,484 20,138 23,129 26,018 26,459 29,210 29,423 30,510 32,037 34,351 34,351 34,351 34,351
Expected Available
Generation
13,146 16,110 18,503 20,814 21,167 23,368 23,538 24,408 25,630 27,481 27,481 27,481 27,481
Demand (Summer
Peak)
16,484 17,868 19,352 20,874 22,460 24,126 25,919 28,029 30,223 35,504 34,918 37,907 41,132
Surplus/Deficit
Generation
-3,338 -1,758 -849 -60 -1,293 -758 -2,381 -3,621 -4,593 -8,023 -7,437
-
10,426
-
13,651