Survival Strategy: How Pakistan Must Confront the Global Energy Crisis
The energy crisis is no longer a distant threat; it is a permanent reality that demands immediate action. Even if global conflicts ended today, normalizing energy supplies and prices would take months of painful adjustment. Pakistan must prepare for a “new normal” where austerity and efficiency are the only viable paths forward. Because the country lacks the foreign exchange reserves to subsidize unchecked consumption, the priority must shift entirely toward productive energy use.
Why Pakistan Must Prioritize Productive Energy Over Comfort
To manage this shift, authorities must allow petroleum prices to absorb the shock of international market fluctuations. While a high-octane levy might create a catchy headline, it does little to solve the underlying problem. High-octane fuel represents only a small fraction of total national use. The real impact on the subsidy burden will only occur when the prices of petrol and diesel rise to reflect true costs. This change will cause pain in a country heavily reliant on private transport and trucking, but it remains the most credible way to restrain consumption.
Beyond pricing, administrative measures are essential to keep the economy moving. Encouraging “work from home” models and asking sectors like banking to run on a rotational basis can significantly curb transport demand. In the gas sector, the situation is even more critical due to the unavailability of RLNG imports. While domestic production has increased, it is still insufficient to meet the total demand. Consequently, the government must prioritize gas supply for the processing industry and large fertilizer plants to protect national productivity and food security. This strategy is necessary even if it results in load-shedding for residential households.
The power sector faces a unique challenge of geography rather than just generation capacity. While Pakistan’s energy mix has improved with indigenous coal and nuclear power, much of this surplus sits in the south. Due to lagging transmission expansion, the state cannot easily move this cheaper power to high-demand areas in the north. As summer air-conditioning demand rises, Punjab may see a return of load-shedding or a reliance on expensive furnace oil plants. To avoid a full-scale balance-of-payments crisis, Pakistan must embrace austerity, adjust the exchange rate, and consider strict limits on non-essential imports like luxury vehicles.
