EVERY conflict eventually finds its own narrative of victory. The US-Iran confrontation will follow the same script, with both sides claiming strategic success. Yet, for Pakistan, the risk of becoming collateral damage in a geopolitical conflict needs serious consideration. Since 1963, from the Arab-Israeli conflict to the OPEC embargo, each disturbance has jolted Pakistan’s economy as fuel prices spiked causing import bills to soar. Every $10 rise in oil prices adds roughly $1.5 billion to Pakistan’s import bill. Since over 80 per cent of our petroleum products are imported, the economy has little room to absorb external shocks. This phenomenon was evident during the Russia-Ukraine conflict and the recent US-Iran war, when petrol prices jumped nearly 70pc, feeding straight into transport and food costs. Inflation surged to double digits in April 2026 for the first time in 21 months, reaching nearly 11pc.
The damage runs deeper than inflation, as rising energy costs reach the average household from two directions at once. On the supply side, fuel prices seep into every link of the food chain — from irrigation and fertiliser to storage and transport. On the demand side, the squeeze is more direct. The data presented in the Household Integrated Economic Survey, 2024-25, shows that housing and utility expenses climbed sharply from 15pc to 25pc over the past two decades, while spending on food declined from 43pc to 37pc, forcing families to cut spending on food, health and education. This deepens malnourishment and illiteracy, turning energy inflation into a long-term socioeconomic liability.
Pakistan’s transport sector, accounting for nearly 37pc of total energy usage, is deeply impacted. Transport accounts for 87pc of Pakistan’s oil consumption, making it both the largest consumer of imported fuels and the fastest channel for global price shocks to reach households. Therefore, introducing electrification within this sector has become a macroeconomic necessity. Pakistan can’t just import electric vehicles; rather, it needs to establish a domestic ecosystem to locally manufacture EVs and install charging infrastructure, with a clean energy base supported by dedicated financing mechanisms.
National energy security demands investment in clean, indigenous resources. What does clean and indigenous mean? While policymakers lump coal, gas and large hydropower in this category, they can’t shape the future given their socioeconomic and environmental impacts. The real momentum lies in solar, wind and storage, as evident from shifting global trends. A recent survey estimated that over 38 gigawatts of distributed capacity have been added since 2018, providing a crucial buffer during the latest geopolitical shock and helping cut fuel imports by an estimated $12bn.
Rising energy costs reach households from two directions.
However, the nature of solar is intermittent. This is where a battery energy storage system comes in. An analysis by Transition Zero and Renewables First shows that BESS can replace peaking RLNG generation, saving up to $2.87bn in RLNG operating costs by 2030.
In FY25, plants running on furnace oil and imported coal mostly sat idle, with average utilisation rates of just 2pc and 23pc, respectively, while those utilising RLNG ran at 41pc capacity to cover peak electricity demands. Their displacement by rooftop solar in the merit order is proof that they have become obsolete yet continue to place a fiscal burden in the form of capacity payments. The fix is to renegotiate these licences and power purchase agreements rather than dumping the cost onto taxpayers. Repurposing offers another practical path as thermal energy storage, acknowledged in Pakistan’s NDC 3.0, can convert coal plants into long-duration storage charged by surplus renewables, turning stranded assets into flexible ones.
Our country’s power planning is obsessed with least-cost calculations and completely ignores the true price of environmental damage and import dependence. Two further non-negotiable criteria must be applied to every planning decision: the climate footprint of the technology being installed, and the degree to which it is indigenous as opposed to imported. However, planning criteria are only as good as the political will to apply them.
Will the next external shock push Pakistan into yet another IMF bailout? Will the country keep tying its fate to fossil fuels whose prices are set in foreign capitals? Will the state keep taxing and stifling the most successful energy transition story of the Global South? In the rooms where decisions are made, such questions do not simply go unanswered. They almost always go unasked.
The writer is senior associate, Energy Tech, at Renewables First, and lead, Pakistan Renewable Energy Coalition.
Published in Dawn, May 25th, 2026