Electrical Consumption in the Industrial Sector of Pakistan: A Structural Time Series Analysis

Abstract

The usage of energy is the central factor in promoting the contribution of the industrial sector economy to develop the economy. Indeed, Pakistan is a growing but recently united country with severe shortages of electricity resources. Therefore, the industry has a growing quantity of growth that leads to economic progress and also prioritizes inevitable challenges to stimulate industrial growth. The purpose of the study is to investigate the relationship between electrical consumption, oil consumption, and gas usage in manufacturing and its impact on the economic growth in Pakistan. Results declared electricity and gas have a positive and significant impact in the short and long run while fuel consumption has a negative shock on the economy in the short run but is positive in long run. The fault correction model (VECM) ensures bilateral relations in the industrialized sector, oil consumption and financial progress in Pakistan. In addition, findings revealed a strong correlation between the variables tested and suggested that the Pakistani government must develop a strong policy to reduce gas and oil to produce electricity, instead of relying on solar energy, water, airstream and biomass sources. Therefore, the government should increase stokes and storage of oil and gas to provide the industrial sector at a cheap rate.