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Pakistan Hit With Power Blackouts As It Struggles With Fuel Shortages And Technical Problems

Tyler Durden's Photo
by Tyler Durden
Monday, Apr 18, 2022 - 10:45 PM

A once-in-a-generation inflation shock is rippling worldwide and has become a significant source of social and political instability in the weakest countries. Pakistan is the latest country to experience paralyzing inflation. 

Bloomberg reports almost a fifth of electricity generation capacity is offline in the South Asian country because some power plants struggle to purchase liquefied natural gas and coal due to record high prices. 

Pakistan's energy costs have doubled to $15 billion in the last nine months ended February from a year earlier. The country has struggled with purchasing energy products to fuel its power plants since the conflict in Ukraine exacerbated commodity shortages, sending prices to record highs. 

Miftah Ismail, appointed as finance minister by new Prime Minister Shehbaz Sharif, tweeted that 3,500 megawatts worth of power capacity are offline due to fuel shortages, and a similar amount is due to technical faults. The total capacity offline is 7,000 megawatts or about a fifth of the country's total generation capacity. 

The poor South Asian country is heavily dependent on imported energy, making it highly sensitive to price swings. 

"Pakistan's situation will not change in the near term since global dynamics are still the same.

"There have been forced outages to deal with the energy shortages," said Samiullah Tariq, head of research at Pakistan Kuwait Investment Co. 

High inflation has already led to a recent government change (so far peaceful). Still, it raises near-term policy turmoil even as the country faces fiscal challenges from soaring commodity prices. 

It could only be a matter of time before rolling power blackouts, soaring food and fuel prices incite unrest. This is already happening around the world in the weakest of countries. 

The tiny island nation of Sri Lanka in the Indian Ocean and Peru have already experienced unrest because of rapid inflation. It appears the dominos are already falling. 

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