Can Pakistan Scale Up Affordable Energy Availability to Achieve Prosperity?

[Riaz Haq]

Pakistan is currently classified as a lower middle-income country, with the ambition to become a high-income country. Its policymakers now recognize that no country has transitioned from middle-income to high-income status without generating substantial electricity at affordable rates. The link between energy and prosperity has been well-established since the advent of the Industrial Revolution. The AI Revolution has further reinforced it. Can Pakistan make the transition to a high-income country by developing indigenous energy resources to minimize dependence on expensive imports amid geopolitical uncertainty? 

Pakistan Developing Indigenous Energy Sources

All high-income countries are high-energy countries. Empirical data from the Energy for Growth Hub confirms that high-income, low-energy nations do not exist. A strong positive correlation (R² ≈ 0.83) ties per capita income and electricity consumption globally, meaning economic development requires scaling up energy availability. 

Electricity-Income Correlation. Source: ToddMoss Substack

Recognizing the importance of scaling up electricity generation, Pakistan is undergoing a major transformation in its power sector. Driven by the need to combat a volatile import bill and stabilize its finances, the nation is aggressively shifting away from expensive imported fuels toward a mix grounded in clean energy (solar, hydro, nuclear and wind) and domestic coal. 

Currently, about one-half of the installed base consists of clean and low-carbon sources while the other half relies on fossil fuels. The actual power generation relies more heavily on clean sources. For example, hydropower contributes 36.6% of total generation, while coal generates 26.3% overall, split between local Thar coal and imported coal. Nuclear adds14.3% of the output and  solar and wind account for approximately 4.3% on-grid, though private behind-the-meter installations have surged exponentially in recent years.

To reduce dependence on fossil fuel imports, Pakistan is tapping into the massive lignite coal reserves in the Thar Desert. Projects operating in Block I and Block II utilize domestic mining to provide reliable baseload power without draining foreign exchange reserves.

Major hydropower facilities like the Tarbela 5th Extension and ongoing mega-projects like Dasu and Diamer-Bhasha are expanding generation potential past 11,600+ MW. The Karachi Nuclear Power Plant (KANUPP K-2 and K-3) reactors supply crucial emissions-free base-load power to the southern grid network. Prompted by steep tariff hikes, private rooftop solar installations continue to surge across the industrial, agricultural and household sectors.

Pakistan has no choice but to make electricity cheap and plentiful to increase the productivity of its people. It is the best way for it to transition from a lower middle-income country to a high-income country. 

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