Report by Engineering Post
The energy sector was an important and fundamental pillar of Pakistan’s economy, serving as a critical enabler of the national economic growth, industrial development and social progress. As such, reliable and affordable access to energy was essential for sustaining industrial progress, enhancing agricultural productivity, facilitating trade and commerce, and supporting the delivery of essential services. As economies were becoming increasingly integrated and technology-driven, energy has evolved beyond a mere input for production to become a key driver of economic competitiveness, investment attractiveness, productivity enhancement, and long-term economic resilience .
During the first nine months of FY 2026, as per the information available from the experts, Pakistan’s energy sector continued to navigate a challenging and operational landscape shaped by the competing objectives of energy affordability, supply concerns, economic efficiency, and environmental sustainability. The energy sector remained under pressure to ensure reliable energy availability, while at the same time also addressing structural challenges and advancing the transition toward a cleaner and more diversified energy mix. Nevertheless, ongoing reforms , capacity additions, and evolving patterns in the energy composition duly have reflected gradual progress toward building a more resilient, efficient, and sustainable energy system in the country.
The ongoing geopolitical tensions and disruptions to maritime routes in and around the Strait of Hormuz have significantly increased volatility in global energy markets, resulting in a sharp rise in crude oil prices and heightened uncertainty regarding energy supplies.. For Pakistan, which remains highly dependent on imported petroleum products, posing a substantial macroeconomic risk through multiple transmission channels such as inflation, higher import bill, supply chain disruptions of industrial raw material etc.
As of March 2026, the total installed electricity generation capacity in the country stood at 49651 MW, with a progressive shift toward cleaner energy sources. Hydel, nuclear, and renewable sources collectively accounted for 50.8 percent of the installed capacity , up from the previous years, while the share of thermal power declined to 49.2 percent from 56.7 percent in the same period last year.
In terms of electricity generation, Pakistan had produced 92835 GWH during July-March F2026, of which 53.1 percent was contributed by hydel, nuclear, and renewable sources, thereby reflecting a welcome transition toward indigenous and environmental- friendly energy sources.
Sectoral consumption patterns highlight the continued dominance of the household sector, accounting for nearly half of national electricity usage.
In the petroleum sector, domestic production remained constrained, and reliance on imports continued. However, instability in the international oil markets due to the Middle East conflict increased the energy import bill compared to the previous year. Domestic refining capacity utilization also remained suboptimal, while efforts to attract investment in refinery upgrades and new capacity also continued..
On the natural gas front , the depletion of indigenous reserves remains a major concern.. With no significant discoveries, the country continued to rely heavily on imported Liquefied Natural Gas (LNG) to meet the domestic demand, especially for the power and industrial sectors. In response, efforts were underway by the Federal Government’s concerned quarters for improving energy efficiency and expand the LNG supply chain infrastructure.
Thar Coal has become the cornerstone of Pakistan’s push for energy security and economic stability. Indigenization of coal-based energy was being actively pursued, with several Thar coal-fired plants contributing to the national grid.
