The impact of the ongoing US-Iran war on ordinary Pakistani households and business is already being felt. With petrol at Rs458 per litre and diesel at over Rs520, citizens are going to be facing real challenges once more.
For a country that only recently suffered inflation rates that peaked at 40 per cent, this conflict could not have come at a worse time. But the crisis can also be an opportunity for Pakistan, and given the bottom-up solar revolution the country has experienced over the last few years, the building blocks are already there for the country to be future ready.
Before getting into how this can be done, one must acknowledge that the government’s decision to pass on the price increase was the right call.
In a country with limited fiscal space, broad-based subsidies are a luxury Islamabad simply cannot afford. A prolonged subsidy program would hurt, not benefit, households and businesses because of the inflationary pressures that would have been created by an expanding fiscal deficit funded by creation of money supply.
But acknowledging fiscal reality does not mean turning a blind eye to human suffering. From the plumber in Karachi to the farmer in Punjab using a tractor in the upcoming wheat harvest, the impact on citizens’ wallets will be devastating. These are real people facing real pain, and policy focus must now shift towards ensuring that these citizens transition to a world where they are not vulnerable to energy price shocks due to the misadventures of other countries.
So what is the answer?
This is a theme I explored at length in my book, Future Ready: Innovation, Abundance, and the Global South. The argument is straightforward: countries like Pakistan cannot afford to remain tethered to a 20th-century energy model built on imported fossil fuels.
The volatility we are witnessing today — where a conflict can cripple the daily lives of 250 million people — is not an aberration. It is the norm in a world of chokepoints, geopolitical rivalries, and concentrated supply chains. The only durable solution is to break the link between mobility and imported fuel. And the way to do that is through the electrification of mobility.
Here is the thing that most commentators miss — Pakistan already has the most critical ingredient for this transition: excess electricity. The country has a surplus generation capacity of nearly 20,000 megawatts. Its grid is 40pc renewable and projected to reach 60pc by 2030. Solar panel imports have surpassed in recent years as electricity prices have gone through the roof, largely in part due to the mismanagement of the energy sector bureaucracy.
A bottom-up solar revolution, driven not by government diktat but by millions of households and businesses seeking cheaper and more reliable power, has quietly transformed the country’s energy landscape. And it is this bottom-up revolution that is saving Pakistan billions of dollars in imported energy costs during the ongoing crisis.
Electrification of mobility and transport is also happening, albeit at a slower pace. In recent months, 70-ton electric trucks have already been rolled out at the Thar coal mining project.
In parallel, a policy architecture is also emerging. The National Electric Vehicle Policy 2025-30 has set targets of 30pc electric vehicle sales by 2030, with subsidies of up to Rs65,000 for electric two-wheelers and Rs400,000 for three-wheelers. The energy ministry has rolled out a discounted tariff of approximately Rs39.70 per kilowatt-hour for charging station operators — a 44pc reduction that dramatically improves the business case for private investment in charging infrastructure. Fifty-eight manufacturers have already secured licences for electric two- and three-wheelers, and local production capacity has reached two million vehicles per annum.
But policy frameworks and production capacity mean nothing without rapid execution. And this is where the upcoming budget cycle becomes critical.
A case for electric mobility
To make Pakistan’s mobility sector future ready, federal and provincial governments should use the budget process to redirect a substantial portion of Public Sector Development Programme spending towards the electrification of mobility, with a laser focus on two- and three-wheelers — the vehicles that account for the largest share of daily urban trips and fuel consumption, and whose riders are the most vulnerable to fuel price shocks.
Public resources through this process can be used as catalysts for private-sector-led investment. Financing mechanisms that help households purchase EVs on affordable installments and capital subsidies can be provided for entrepreneurs setting up charging stations. Credit guarantees that allow banks to lend to first-time borrowers, such as the motorcycle mechanic who wants to convert his workshop, can multiply government investment at scale.
The scale of government incentives can help businesses project demand for these vehicles, allowing them to plan for new manufacturing and assembly capacity. As part of the incentives to scale production, local sourcing norms can be set such that indigenous capacity is built over time.
With citizens facing tremendous pain at the pump due to the price hikes, the incentive to electrify mobility is already occurring at the household level. What is now needed is a policy approach that taps into that sentiment.
The supply-side dynamics of this transition are also favourable because there is already excess capacity of solar panels and battery-energy storage systems and EVs in the world.
China, a strategic ally of Pakistan, is a leader in this space, driving down prices and making next-generation EVs and battery storage systems accessible to the masses. This means that strategic relations can be leveraged to explore win-win outcomes for both Pakistani and Chinese businesses.
The beauty of this approach is its cascading benefits. Every EV loan creates a formal credit history for a citizen who may have never had one. Every charging station is a small business with a bank account, tax receipts, and employees. The result would be an energy transition paired with the expansion of financial inclusion at scale, which is precisely the kind of bottom-up economic formalisation that Pakistan has been trying to achieve for decades. While subsidies for fuel imports would literally be burnt into the air, subsidies for electrifying mobility can make Pakistan energy secure for the long haul.
The macro benefits of such an approach are equally compelling. Greater electricity demand, particularly from EV charging combined with battery storage, would help make the grid more resilient and sustainable. It would also begin to address the perverse dynamic where surplus capacity sits idle while consumers pay ever-higher tariffs to cover fixed capacity payments.
More demand means better utilisation, which means lower average tariffs for everyone. In a country trapped in what analysts rightly describe as a potential utility death spiral where defecting solar users push costs onto remaining grid customers, electrified transport could be the demand anchor that saves the system.
Then there is the air quality crisis. Pakistan is the third most polluted country in the world. Lahore routinely ranks among the top three most polluted cities on earth. Electrifying the millions of motorcycles and rickshaws would also be a public health intervention that would improve the quality of life across urban centres in Pakistan.
An opportunity to think differently…
The opportunity is there for the taking. Pakistan’s solar revolution has already demonstrated that when ordinary citizens are given the right incentives and market conditions, they will drive transformation faster than any government programme.
The same energy and entrepreneurial spirit can be channelled into electrified mobility, but only if policymakers have the vision and courage to redirect resources accordingly.
The present crisis creates space to rethink mobility in Pakistan. With the sun already powering millions of rooftops in the country, it is time to now convert that energy into powering mobility.
article,
article > *,
.story__content {
background: black !important;
color: white;
}
.social {
filter: brightness(0) invert(1);
}
.story a { color: #d55 !important; }
