Developing and developed countries are facing energy crises due to the Russian invasion of Ukraine. A developing country like Pakistan’s oil import bill has risen by 107%, from $5.64 billion to $11.69 billion from July2021-June 2022. The quantity of crude oil imports has increased by 1.4% & a 75.34% increase in value. LNG imported bill is 24.36% of total gas. This rise in imports bill is due to a hike in petroleum prices, and depreciation of PKR. All of this has raised the cost of electricity generation. The National Electricity Power Regularity Authority has surged the prices of electricity per unit by RS.7.9 or RS.8 for July 2022-June 2023. It was RS.16.91 per unit, which has risen to RS.24 per unit.
A shortfall of energy is still prevailing despite a surge in energy prices. Energy crises have affected the business activities in Pakistan, where shopping malls and markets are closing at 9 pm and restaurants & wedding halls at 10 pm. Many small businesses have stopped productivity due to an increase in energy & petroleum prices. Productive activities are decreasing in the industrial sector and inflation is increasing in Pakistan.
A country like America is also facing the problem, Century Aluminum Company, the major Aluminum manufacturer in America, has 600+ employees. It has announced that it will stop production operation at its Hawesville Smelter due to the rising energy cost for up to one year. The company is halting the productivity for one year with the hope that energy prices will come to a standard level after one year and the cost of production will decline.
Energy crises and the closure of a larger company for one year will increase unemployment and create a shortage in the aluminum supply & aluminum prices will rise in America. The confidence of investors will shatter and will deteriorate the investment activities.
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