LAHORE: Pakistan’s growing reliance on imported fossil fuels is increasingly exposing the economy to fiscal pressure and energy security risks, as declining domestic gas reserves and rising industrial demand continue to widen the supply gap, according to a new report by the Institute of Cost and Management Accountants of Pakistan (ICMA).
The detailed report and SWOT analysis highlight that Pakistan’s energy mix remains heavily dependent on oil, gas, and coal, with supplementary contributions from nuclear and renewable sources such as hydropower, wind, and solar. However, shrinking indigenous reserves and rising dependence on imported liquefied natural gas (LNG) and crude oil are posing significant challenges for sustainable economic growth, industrial productivity, and urban development.
ICMA noted that successive governments have introduced policy frameworks such as Vision 2025 and the Medium-Term Development Framework to improve energy efficiency, modernise infrastructure, encourage private-sector participation, and promote long-term sustainability. Despite these efforts, the energy sector has undergone structural shifts over decades, shaped by gas discoveries, regulatory reforms, and increased foreign investment between 1947 and 2025.
The report observed that Pakistan’s dependence on imported energy has intensified in recent years due to declining domestic gas production and rising consumption. Since the introduction of LNG imports in 2015, demand patterns have shifted, with consumption falling from 8.2 million tons in 2021 to an estimated 6.1 million tons in 2025, largely due to high import costs and the rapid expansion of distributed solar energy.
ICMA further stated that distributed solar generation in Pakistan has reached nearly 34 gigawatts by 2025, while solar panel imports between 2017 and 2025 are estimated at around 50 gigawatts—nearly equivalent to the country’s total grid capacity.
The analysis warned that Pakistan’s import-heavy energy structure has increased exposure to global geopolitical tensions, supply chain disruptions, and volatile international energy prices. It also pointed to structural inefficiencies in the LNG sector, driven by long-term contracts signed under earlier demand projections, contributing to rising financial strain and circular debt estimated at Rs1.889 trillion.
While identifying strengths such as established fuel supply infrastructure and existing generation capacity, the report flagged key weaknesses including high import dependence, escalating energy costs, and inefficiencies across the energy value chain.
At the same time, it noted opportunities in renewable energy expansion and domestic resource exploration, while cautioning that global commodity volatility and geopolitical instability remain major threats to Pakistan’s energy security.
The report said Pakistan’s long-term energy transition strategy targets 60 percent clean electricity generation by 2030, though fossil fuels are expected to remain part of the energy mix during the transition period. It emphasized that achieving energy security will require deep structural reforms, improved demand management, infrastructure modernization, flexible fuel procurement strategies, and accelerated investment in renewable and indigenous energy resources.
Story by SHAHRAM HAQ
