The usual short-term austerity measures announced by the government are not enough to soften the impact of the current fuel crisis triggered by the US-Israel war against Iran, according to analysts at least. To quote one of them, “Firefighting should follow strategic steps to build a secure, resilient and self-reliant energy future,” and many others share similar views.

The increase of Rs55 per litre in current fuel reserves has reportedly enabled oil marketing firms to make Rs113 billion in windfall profits from inventory gains. Officials of the Petroleum Division are quoted as saying that the new price is not based on the cost of a particular shipment purchased weeks earlier, but determined by the average Platts benchmark prices for petrol and diesel during the pricing period along with exchange rate adjustments.

Unfortunately, “these steps will hardly ease the burden on citizens already struggling with the steepest rise in fuel cost in months”, says a Dawn editorial. Pakistan’s austerity measures are a “ritualistic response to public anger rather than a sincere attempt to reform the state spending”. They rarely translate into long-term fiscal discipline.

Fortunately, to quote Asad Ali Shah, “Pakistan is richly endowed with indigenous energy potential.” Thar coal reserves are among the largest lignite deposits in the world. They could supply a substantial portion of Pakistan’s base-load electricity for decades at a significantly lower cost than imported fuels.

Energy security built on Thar coal, hydropower and renewables could make Pakistan’s economy viable and competitive

The country also has an enormous hydropower potential of more than 60,000 megawatts, much of which remains untapped. In addition, the country lies in one of the most favourable regions for solar energy, as the wind corridor of Sindh and Balochistan offers significant renewable power potential.

In short, Mr Shah notes that energy security built on Thar coal, hydropower, and renewables can make Pakistan’s economy viable and competitive.

The Pakistan Petroleum Exploration and Production Companies Association has lately emphasised the urgent need to boost domestic indigenous oil and gas exploration to mitigate high import reliance. Industry leaders point to circular debt, capacity constraints, and a slow five- to seven-year transition from exploration to production for onshore projects as key hurdles.

Pakistan is reported to have previously curtailed indigenous gas production by as much as 250-300 million cubic feet per day to honour take-or-pay LNG contracts. The government is now finally re-plugging the reserves to reduce imports as production declined from 4.1 billion cubic feet (bcf) per day in 2014 to roughly 2.8bcf per day as of early 2026. Currently, LNG supplies from Qatar are suspended because of the war in the region.

The country’s strategic reserves of coal in Thar provide a hedge against global energy shocks as domestic production jumped to a record 19.1 million tonnes in FY25 from 12m tonnes just two years ago.

Moreover, Thar-based generation has reached a capacity of 3,300 megawatts, delivering electricity at a fraction of that of imported fuels. While furnace oil and LNG-based generation can soar towards Rs50 per unit during global conflict, say analysts, Thar coal power remains stable at roughly Rs5-8 per unit.

“The most effective hedge against oil shocks is simply to need less oil,” says Dr Khalid Waleed, a research fellow at the Sustainable Development Policy Institute.

Encouragingly, he notes: Pakistan’s recent surge in rooftop solar adoption has already begun to reshape parts of the energy landscape. Distributive solar installations have expanded rapidly in recent years, adding several gigawatts of capacity across households, commercial establishments and industries. The systems, often financed through household savings and overseas remittances, are gradually reducing their dependency on grid electricity generation.

The electrification of transport, expansion of renewable energy and improved energy efficiency could also gradually reduce the economy’s exposure to volatile global oil prices in the long run, says Dr Waleed.

While Pakistan has stepped up efforts for the construction of small, medium and large dams, mini dams can be built within a fraction of the costs required for large, financially difficult dams, and in a much shorter time.

On March 7, a meeting chaired by Chief Minister Maryam Nawaz approved the construction of 17 new small dams as part of a 10-year plan to harvest rain and flood water during the monsoon season for improved availability of water for agriculture.

On January 17, officials said that Punjab was constructing 14 small dams in the Rawalpindi Division. Similarly, the construction of mini-dams has also been stepped up, particularly in Khyber Pakhtunkhwa.

Windmill construction in 2026 is focused on expanding renewable energy capacity with key projects including a 100MW hybrid project in Jhimpir, a corridor in Sindh and a 25MW wind project in Balochistan.

Regardless, strenuous efforts are required by relevant authorities to ensure that energy plans and projects are completed expeditiously.

Published in Dawn, The Business and Finance Weekly, March 16th, 2026