Abstract
Pakistan’s economy faces severe energy shortfall since the decades of 1990s, and it
has severe impacts on various sectors of the country. The shortfall is the difference
between supply and consumption. To keep out the economy from any sort of
disequilibrium, it is essential to pinpoint the key determinants of energy
consumption. In this connection, the accurate forecast of energy consumption is
important for policy initiation and suitable execution to deal with energy needs of
the day. The main objective of this study is to measure the factors affecting coal to
provide a suitable forecast of coal consumption in Pakistan. For this purpose annual
time series from 1972 to 2015 are put into investigation through Auto Regressive
Distributive Lags (ARDL) and ARIMA techniques are to identify the factors affecting
coal consumption and to forecast about future value. The outcome of the co integration confirms the appearance of long-run association. The results of Error
Correction Model confirm stable long run equilibrium. The main determinants of
coal consumption are per capita national income measured by Per Capita GDP, total
import of coal and production of Cement. Furthermore the results of Auto
regressive integrated moving averages (ARIMA) forecast increasing trend in Coal
consumption during the period of 2016-2030. The responsiveness of Coal
consumption is inelastic to income and prices which indicates that there is need for
economic deregulation and alteration in energy market like privatization and to
subsidize the energy sector. This study also suggests that more funds should be
injected from both public and private sector in favor of technology to satisfy
increase in coal consumption .
