Pakistan Burns Rs. 3.5 Trillion a Year on Imported Energy, Experts Say It’s Fixable

Pakistan is spending an estimated Rs. 3.5 trillion every year on energy imports that could potentially be avoided through better planning, energy efficiency and local manufacturing, according to research presented at an energy security conference organized by the LUMS Energy Institute (LEI).

Key points

• LEI's research team, including technical experts Umar Farooq and Faisal Javaid Mughal, presented the findings at the event attended by National Grid Pakistan Chairman Dr.
• The projected energy mix would comprise hydropower at 47 percent, wind at 25 percent, nuclear at 18 percent and solar at 8 percent.
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• Pakistan imports approximately $2.7 billion worth of LNG to meet space and water heating requirements during the four winter months.

Meanwhile, the research highlighted how the country continues to import billions of dollars worth of liquefied natural gas (LNG) for winter heating while much of its existing electricity generation capacity remains unused.

Experts attributed the growing costs to poor planning, delayed adoption of building codes and the failure to revive domestic manufacturing of energy equipment. Oil Rates Plunge to 2-Month Low. Unused Power Capacity Drives Import Costs.

Pakistan has more than 36, 000 megawatts of installed electricity generation capacity, but its baseline electricity demand remained around 8, 000 megawatts between 2015 and 2023, despite population expansion, according to LEI research.

National Grid Pakistan Chairman Dr. Fiaz Chaudhry remarked much of the further generation capacity had been developed to meet cooling demand during summer, leaving a significant portion unused for much of the year. The resulting capacity payments have continued to electricity costs and contributed to circular debt.

Meanwhile, Pakistan imports approximately $2.7 billion worth of LNG to meet space and water heating requirements during the four winter months. Chaudhry remarked the mismatch between electricity generation capacity and seasonal energy demand reflected a growing challenge in the country's energy planning. Cheap Electricity Impossible in Pakistan Due to Grid Failures. Delayed Building Codes Limit Energy Savings.

In practice, the LEI research additionally identified delayed implementation of energy conservation building codes as a major source of avoidable electricity consumption. The federal administration approved the codes in 2023, with the potential to reduce cooling demand by 51 percent.

Nevertheless, Punjab, Sindh and Balochistan have yet to adopt the codes, leaving their implementation pending. The Capital Development Authority and the Khyber Pakhtunkhwa administration have adopted the regulations and are at different stages of implementation.

According to the research, improving energy efficiency in just 25 percent of residential buildings could reduce peak electricity demand by approximately 3, 000 megawatts and generate potential annual energy cost savings of Rs. 442.6 billion. Govt to Slap Heavy Fines Against Shopkeepers Who Ignore FBR. Local Manufacturing Could Replace Imports.

LEI researchers additionally identified significant opportunities to reduce dependence on imported electricity equipment through domestic manufacturing. A power sector indigenization assessment estimated that approximately Rs. 1.1 trillion worth of equipment demand throughout transmission and distribution could be met through local production, against projected demand of Rs. 1.9 trillion.

In practice, the assessment evaluated the manufacturing readiness of approximately 49 local firms and outlined a proposed framework for a national indigenization roadmap. Experts remarked Pakistan previously manufactured a number of types of power plants, equipment and spare parts locally before WAPDA's unbundling in 1998, but domestic production capacity was subsequently underutilized as reliance shifted toward imported conductors, switches and other equipment.

According to The researchers additionally, an Engineering Development Board led team was required to announce an electricity equipment indigenization plan by June 2026 under the National Electricity Policy 2023, but the deadline passed without the plan being introduced. LEI pressed the relevant administration institutions to accelerate the long delayed Power Sector Indigenization Plan to revive domestic manufacturing and reduce foreign exchange spending.

Pakistan Ends LPG Monopoly, Brings in Open Bidding for Locally Produced Gas. Renewable Energy Offers Long Term Savings.

Separately, LEI's research on Pakistan's net zero transition outlined a modeled pathway to almost completely decarbonize the power sector. Under the proposed pathway, fossil fuel generation would decline from 49 percent in fiscal year 2024 to approximately 1 percent by fiscal year 2040.

Meanwhile, the projected energy mix would comprise hydropower at 47 percent, wind at 25 percent, nuclear at 18 percent and solar at 8 percent. Researchers remarked integrated energy planning, improved efficiency, renewable energy integration and domestic manufacturing could assist create electricity more affordable and strengthen Pakistan's long term energy security.

LEI's research team, including technical experts Umar Farooq and Faisal Javaid Mughal, presented the findings at the event attended by National Grid Pakistan Chairman Dr. Fiaz Chaudhry, Independent System and Market Operator CEO Dr. Masood Ahmad and National Grid Pakistan CEO Altaf Hussain Malik. Chaudhry, who had cautioned concerning a potential capacity trap in 2014 and 2015, noted evidence based research had additionally backed revised least cost generation planning, delivering approximately $17 billion in projected savings. Stay Connected with ProPakistani.

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Taken together, the developments around pakistan Burns Rs. 3.5 Trillion a Year on Imported Energy, Experts Say point to a situation that is still moving, and the coming days should bring more clarity.