ISLAMABAD: The United Nations Economic and Social Commission for Asia and the Pacific (UN-ESCAP) will provide policy advisory and technical support on energy financing to assist Pakistan in developing its Energy Transition Investment Plan (ETIP), aimed at accelerating the country’s shift towards a sustainable and resilient energy future.
At the request of the government, a UN-ESCAP scoping mission recently visited Pakistan and held consultations with relevant ministries and development partners to assess the country’s needs, challenges, and opportunities related to energy transition financing. According to UN-ESCAP, the mission helped identify key entry points for building a robust ETIP while highlighting areas where policy, financial, and institutional gaps need to be addressed.
Pakistan’s energy transition is considered vital for strengthening economic resilience, meeting climate commitments, and ensuring fiscal stability. The country’s heavy dependence on imported fossil fuels, combined with a circular debt crisis exceeding Rs2.6 trillion, has underscored the urgency of shifting towards renewable energy sources to meet growing energy demand by 2030. However, progress remains constrained by policy inconsistencies, continued reliance on fossil fuels, and limited access to concessional financing.
The proposed ETIP is expected to play a central role in attracting green foreign direct investment and promoting blended finance models that combine public, philanthropic, and private capital. Concessional financing—such as low-interest loans and risk guarantees—will be critical in improving the bankability of renewable energy projects, particularly those serving underserved and off-grid communities.
UN-ESCAP has also emphasised the need to strengthen existing initiatives, including Green Eurobonds, Panda Bonds, and Green Sukuk, as well as innovative pay-as-you-go financing models. Greater focus is required on mobilising funds for grid modernisation, which is essential to addressing Pakistan’s circular debt challenge and enabling the integration of distributed solar and battery storage systems into the national grid.
Through its Financing Energy Transition (FET) programme—under which targeted technical assistance has already been provided to countries such as Indonesia, the Philippines, and Vietnam—UN-ESCAP has expressed its readiness to support the Government of Pakistan. This support will complement ESCAP’s ongoing engagement with Pakistan in the energy and climate domains.
ESCAP’s FET work stream has produced several analytical reports identifying critical gaps in energy transition finance, alongside capacity-building initiatives and regional policy dialogues. Leveraging its expertise in integrated energy transition planning, scenario analysis, and capacity development, UN-ESCAP aims to contribute to Pakistan’s ETIP, support reforms in the national energy mix, enhance industrial competitiveness, and advance progress towards Net-Zero emissions. The use of innovative financial instruments, including green bonds and carbon markets, will also form a key component of this support.
Despite growing renewable potential, Pakistan’s energy mix remains heavily skewed towards fossil fuels, with imported oil, LNG, and coal dominating power generation—continuing to pose serious challenges to fiscal sustainability and long-term energy security.
Story by Amin Ahmed
