The Power Sector Chapter 23: The Power Sector The power sector must play a central and strategic role in providing uninterrupted and moderately priced electricity to the production sector of the economy and to households. 23.1. Characteristics of the Sector The power sector directly through the generation and distribution of electricity contributes almost 1.5 percent to the GDP of Pakistan. Table 23.1 shows the evolution of generation capacity, the actual production of electricity and the rate of capacity utilization. Table 23.1: Generation Capacity, Electricity Generated and Level of Capacity Utilization Installed Capacity(MW) Annual Increase (MW) Generation (Gwh) Index of Capacity Utilization 1990-91 8776 41082 100.0 1994-95 12100 831 53545 94.9 1999-2000 17399 1060 65748 80.7 2004-05 19378 396 85738 94.5 2009-10 20922 309 95608 97.6 2014-15 23795 575 107408 96.4 2019-20 38619 5571 134746 70.1* * Over 5500 MW of excess capacity Source: PES The expansion of generation capacity has proceeded in cycles. Power outages were at their peak in the late 80’s. The 1994 Power Policy provided a number of big incentives to Independent Power Producers(IPPs), including a guaranteed rate of return and various tax breaks. Consequently, there was a strong investment response in power generation and annually between 1994-95 and 1999-2000 over 5000 MW were added. The surplus capacity for electricity generation was one of the key factors which contributed to relatively fast growth during the Musharraf Era. However, over the 10-year period, from 1999-2000 to 2009-10, there was only a minor expansion in generation capacity. Consequently, power outages returned in a big way. The incidence of these outages peaked in 2014-15 and cost the economy annually over 2 percent of the GDP. For example, the cost of electricity not supplied to industry reached the high value of Rs 46 per kwh. 221