Energy consumption in industrial sector declined in 2009

KARACHI - The share of industrial sector in overall energy consumption has declined to 40 per cent in FY09, an energy analyst said on Wednesday. This fall is attributed to slowdown in the growth and performance of Large Scale Manufacturing industries and global economic downturn witnessed by the advanced economies during the period under review. Farhan Mahmood a research analyst, while quoting a fresh data on the energy sector, said energy consumption is not growing in tandem with GDP growth, which in turn means limited energy resources. He mentioned that during last 2 years (FY07-FY09), share of industrial sector in overall energy utilization declined from 44 per cent to 40 per cent, though still being the largest energy consumer. He also said that the sector relies heavily on gas as major fuel. On the other hand, oil consumption remained lower as average oil price was relatively higher during this period whereas the sector was reluctant to pass on the impact fully to the consumers due to economic downturn. He predicted that with growing energy shortage in the county, effective allocation of energy resources to various sectors would be the key concern. One of the major reasons last year (FY09) was 8 per cent decline in LSM amid global recessionary woes and energy shortages. Even if we exclude last year, the declining trend in energy share was evident in FY08 which was 43 per cent compared to 44 per cent in FY07. On the other hand, share of transport and domestic sectors- second and third largest energy consuming sectors after industrial sector rose by 300bps and 100bps, respectively during this period, he opined. He further pointed out that after the industrial sector; transport sector is the largest energy consuming sector. During last couple of years its share has gone up from 27 per cent in FY07 to 30 per cent in FY09. This is primarily due to higher CNG intake during this period. Diesel is the main energy source for transport with 64 per cent share. To meet energy shortfall, it is evident that the government will be focusing more on short-term measures and rely on imported energy like oil and new oil based power plants. Both these measures would increase cost of production henceforward, he mentioned.