On the morning of March 13, 2026, Ahmed, a delivery rider in Lahore, pulled into a petrol station on Multan Road and watched the attendant reset the pump.

The price had jumped again. Not by five or 10 rupees but by a significantly higher amount, which kept on changing, because of indecision. Dubai crude had doubled in 14 days, from US$71 a barrel to US$146, and the shockwave had reached Ahmed’s fuel tank before it reached the Pakistani Ministry of Finance’s spreadsheets.

A couple of weeks later, on April 2, with the US-Israeli-Iran war heating up further and the Strait of Hormuz blocked by Iran, effectively stopping 20 percent of global oil and gas shipments, the price of petrol skyrocketed again, this time by Rs134.

Ahmed earns roughly Rs35,000 a month. His Honda CD-70 motorcycle consumes about eight litres of petrol a week. Before the shock, that cost him around Rs2,000. After it, closer to Rs3,500. The difference, which is about Rs6,000 a month, is the margin between paying rent, and not, or whether to pay the school fees of his children, or not. It is not an abstraction — it is a budgeting decision.

Pakistan’s dependence on imported petroleum is a structural crisis exemplified by how oil price spikes always send the country into an economic spiral, the brunt of which is borne by the masses. However, the numbers tell us that a cheaper, cleaner future is within reach, if the state chooses to act before the next hit

Pakistan has more than 30 million registered motorcycles. They carry workers, students, parents ferrying children to school and the entire last-mile delivery economy that keeps Pakistan’s cities fed. Together, they consume roughly 1.92 million metric tonnes of petrol every year, which is a quarter of everything the country burns.

When oil prices spike, these 30 million riders absorb the hit first, hardest and longest.

With a Pakistan-facilitated two week ceasefire currently in place and hopes of a more permanent end to hostilities in sight, oil prices may well be on a downward trend in the coming days. But that should not prevent us from looking at a structural problem that keeps things on a knife’s edge for Pakistan in macro-economic terms and for the budgets of people like Ahmed.

THE 14 BILLION DOLLAR HABIT

Pakistan spent US$14.2 billion importing petroleum products and crude oil in the latest 12-month period, as per trade statistics.

That is 67 percent of the country’s trade deficit. It is more than what we spend on importing machinery, chemicals or food. It is the single largest recurring drain on foreign exchange and, unlike machinery, it produces nothing and is all effectively burned. Every dollar that leaves the country for a barrel of crude oil is a dollar that does not build a factory, fund a school, construct a road or equip a hospital.

The fact that fossil fuel imports account for 67 percent of the country’s trade deficit, makes Pakistan’s the third highest share among 74 climate-vulnerable nations, behind only Morocco and Bangladesh. This is not a new finding. It has been true for two decades. What is new is that a credible, affordable, scalable alternative finally exists, and that is through electrification.

Pakistan consumes approximately 58.8 million litres of petrol and diesel every day. Every $10 increase in the price of a barrel of crude oil adds 400-500 million dollars to the annual import bill. At peak shock pricing in March 2026, the annualised petroleum import bill would have exceeded 22 billion dollars. The country is, almost always, one sustained disruption away from a balance-of-payments (BOP) emergency.

We have been here before.

In 2008, when the crude oil price hit $140. And in 2022, when the crude oil price touched $120 after Russia’s invasion of Ukraine. Each time, the response was the same: absorb the shock, pass through some of it, subsidise the rest, borrow more, destroy purchasing power through rampant inflation and wait for prices to fall.

It is groundhog day, but spring is further out of reach every time it is repeated.

THIRTY-NINE MILLION VEHICLES, ONE PROBLEM

Pakistan’s registered vehicle fleet stands at 39.09 million units. Motorcycles dominate at 30.52 million, making up 78 percent of all vehicles on Pakistan’s roads. Cars account for 4.85 million out of the 39.09 million units. Trucks, buses, tractors and rickshaws make up the rest.

The fleet is old. The average motorcycle is eight years old, while the average car is 12 years old. The average truck is 18 years old. Nearly 9.4 million motorcycles are over a decade old, burning 20 to 40 percent more fuel per kilometre than a new equivalent, because of degraded engines, poor maintenance and the complete absence of emission standards.

But the problem runs deeper than vehicles. Pakistan has 1.3 million agricultural tubewells, of which 83 percent, roughly 1.08 million, run on diesel. They irrigate 60 percent of the country’s cultivated land. Every cropping season, a farmer in southern Punjab pays approximately Rs3,000 per acre per irrigation cycle to run a diesel pump. That cost cascades into the price of wheat, rice, cotton and sugar.

Then there are the more than 148,000 telecom towers, which will continue to increase, consuming roughly 350 million litres of diesel annually, making the mobile tower industry one of the country’s single largest diesel consumer. The reason for this consumption is rather banal and is due to the grid being unreliable. Towers need to run around the clock, so diesel generators fill the gap. Every text message you send, every call you make, somewhere, a diesel generator is running to keep the signal alive.

The fossil addiction, therefore, is not confined to the highway. It is in the farm, the tower and the kitchen.

THE COST CURVES HAVE CROSSED

The fact that should change the conversation is that the economics for electrification have already turned. Electric end-use technologies, motorcycles, cars, buses, solar pumps, battery storage, have fallen in cost by 30 to 95 percent over the past decade. This is not a projection. It has already happened.

An electric motorcycle from a Chinese manufacturer now retails at $400-600. A CD-70 costs $500-$700. The purchase prices have converged. But the operating costs have not. Charging an electric motorcycle costs Rs15-24 for 60 to 80 kilometres of range. The same distance on a petrol bike costs Rs70-80. Over a year, the electric rider saves Rs25,000-40,000. For Ahmed, that is the difference between surviving and saving.

The same arithmetic applies at every scale. A 12-metre electric bus costs more upfront, roughly $200,000–250,000 versus $100,000–120,000 for a diesel bus. But its operating cost is 15-20 cents per kilometre versus 60-80 cents for diesel. Over a 12-year life at 60,000 kilometres per year, the electric bus is 25-35 percent cheaper to own than the diesel bus.

A solar tubewell system eliminates diesel costs entirely. If it is used, the irrigation cost drops from Rs3,000 per acre to Rs50 per acre. The payback period is two to three years. After that, the sunlight is free. Yes, there are unintended consequences associated with lowering of water tables, but that is a manageable problem and should not in any way discourage the transition from diesel to electric.

For many emerging economies, the relevant comparison is not petrol versus electric. It is no access versus electric access.

Solar-plus battery systems can now deliver reliable power to communities that the grid never reached and the fossil fuel system never served. Pakistan’s own rooftop solar revolution, which has seen over 30 gigawatts

installed almost entirely through private savings and without government subsidies, is proof that when the economics works, adoption follows. The government did not plan this boom, but Pakistan’s households did the arithmetic themselves.

FIVE LEVERS, FIVE YEARS

A five-year electrification strategy across five specific sectors — electric motorcycles, electric and hybrid cars, electric public transport buses, agricultural tubewell solarisation and telecom tower de-dieselisation — can displace approximately 2.6 million metric tonnes of petroleum products annually by 2031.

That is 15 percent of everything Pakistan currently burns. In dollar terms, it avoids $5.8 billion in petroleum imports over the five year period.

This is nearly half of what the country currently holds in foreign exchange reserves. It is more than the total disbursements Pakistan has received from the International Monetary Fund (IMF) in any single programme year. And it is achievable, not through austerity or demand compression, but through technological substitution, by replacing one way of doing things with a cheaper way.

The biggest single lever is the one hiding in plain sight: motorcycles. If Pakistan can shift new motorcycle sales toward electric, reaching 1.5 million electric units per year by 2031, building a cumulative fleet of 4.5 million, the petrol displacement alone reaches 460,000 metric tonnes annually.

The policy tools are straightforward — reduce import duties on electric two-wheelers, incentivise local manufacturing, provide a purchase subsidy funded from the petroleum development levy, and offer a scrappage incentive for the 9.4 million petrol bikes over 10 years old.

Vietnam and India both have done this. Pakistan has not even started.

BUILDING THE BUSES THAT DON’T EXIST

If motorcycles are the largest lever, public transport is the most consequential.

Pakistan has 173,000 registered buses serving 240 million people, a ratio of 0.72 buses per thousand. India is at 1.4 buses per thousand and Turkey is at 2.5 buses per thousand. Colombia, home to Bogotá’s TransMilenio (a massive bus rapid transit system), is at 3.0 buses per thousand.

Karachi, which is a city of more than 20 million, operates fewer than 5,000 buses. Lahore, at 13 million, has around 2,500. These are not systems. They are symptoms.

The absence of public transport does not mean people stop moving. It means that they buy motorcycles instead. It means private petrol consumption rises. It means the import bill swells. The vicious cycle is structural: inadequate buses drive motorcycle purchases, which increase petrol imports, which drain foreign exchange, which constrain the fiscal space available for bus investment.

Breaking this cycle requires building an electric bus fleet essentially from scratch. Pakistan desperately needs a public transport plan that can solve mobility, household budget problems and BOP issues through a single intervention.

Bogotá’s experience is instructive. In 1999, its transport system was dominated by 15,000 ageing buses run by 66 private companies, a profile that mirrors Karachi today. TransMilenio replaced this chaos with a structured BRT on dedicated lanes — 114 kilometres, 2.3 million passengers daily, 100 percent operating cost recovery through fares. The fuel displacement in the corridor catchment area was 12-15 percent.

The system was financed through local fuel taxes, national grants and a World Bank loan. It went from drawing board to operational in three years. But in the case of Karachi, the jokes keep writing themselves in the case of BRT — wherein it may be easier to open the Strait of Hormuz rather than ensure completion of the BRT project along one of the city’s main arteries, University Road.

Evidently, the economic case is settled. What is missing is the national commitment to actually execute projects. The lack of ability to do the same results in sub-optimal outcomes across the board.

THE PARADOX IN THE GRID

A natural question follows: if we electrify millions of vehicles, where does the electricity come from?

The answer is embarrassing in its simplicity. The capacity is already there — whether by design or sheer accident, we have surplus power capacity at a time when the world is scrambling for more power.

Pakistan’s installed generation capacity is 46,605 megawatts. Peak summer demand reaches 28,000-30,000 megawatts. The surplus is 16,000–18,000 megawatts, a capacity for which consumers pay Rs2.5-2.8 trillion annually in capacity charges, regardless of whether a single electron is generated.

During off-peak hours, 10 at night to six in the morning, exactly when vehicles charge, the surplus widens further. The grid is not constrained. It is underutilised. It is, in the most literal sense, sitting idle while the country imports diesel.

The incremental electricity demand from electrifying 4.5 million motorcycles, 290,000 cars and 8,000 buses by 2031 is approximately 3,231 gigawatt-hours per year. That is three percent of current national consumption. The peak charging demand is 1,130 megawatts, less than four percent of the existing surplus. Electrification does not strain the grid. It rescues it.

Every kilowatt-hour sold for vehicle charging at off-peak rates generates revenue for distribution companies, reduces the per-unit capacity payment burden and displaces an imported fuel that costs three to four times more.

And for tubewells and telecom towers, the grid is not even involved. These interventions use dedicated solar panels and batteries. They are off-grid by design. They displace 1.55 million metric tonnes of diesel annually without drawing a single watt from the national system.

WHAT THE REGION ALREADY KNOWS

Vietnam’s VinFast electric scooter retails at $500 and has captured 15 percent of new two-wheeler sales in Vietnam. The government exempted electric vehicles (EVs) from registration taxes and mandated that ride-hailing fleets transition to electric.

India’s Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India Phase II (FAME-II) programme subsidised electric two-wheelers at INR15,000-25,000 per unit, driving annual sales from 150,000 to over one million in three years. The subsidy was funded by a cess on petroleum products, exactly the mechanism available to Pakistan through the petroleum development levy but which is, ironically and tragically, used for budgetary support.

Indonesia exempted electric vehicle imports from duties. Bangladesh’s e-rickshaw fleet now exceeds two million units.

Pakistan’s electric vehicle policy was drafted in 2020. It remains largely unimplemented. The country produced just 186 electric cars last year — in a fleet of 39 million vehicles.

The gap is not technological. The infrastructure for a smart, targeted and digitally-delivered electrification programme exists. What does not exist is the policy architecture that connects these capabilities to the transition.

Every year without an electrification strategy costs the country approximately $1.2 billion, at a minimum, in avoidable petroleum imports. Over five years of inaction, the cumulative cost is $5.8 billion, money that leaves the country, funds other nations’ sovereign wealth funds and returns nothing. The more accelerated the transition process, the more savings Pakistan and Pakistanis can accrue.

The total public investment required for a five-year electrification programme across all five sectors is $3.4 billion, or $680 million per year. The return is $5.8 billion in avoided imports. That is a 1.7-times multiplier, before accounting for reduced inflation pass-through from oil shocks, lower healthcare costs from air pollution, and employment creation in solar installation and electric vehicle servicing. The payback period for the public exchequer is less than four years.

ACCELARATING TRANSITION

The base-case strategy is deliberately conservative. It assumes gradual adoption curves, institutional friction and the inertia that defines Pakistani policymaking. But there can be an aggressive scenario, where the government treats electrification not as an aspiration but as a wartime mobilisation.

Two interventions, pushed to their logical limits, change the fiscal arithmetic dramatically.

First, electric motorcycles. Pakistan produces roughly 1.7 million motorcycles annually. If the Economic Coordination Committee (ECC) mandated that 100 percent of new motorcycle sales be electric by 2030 (not an impossible target — China crossed that threshold in key provinces in 2024) and simultaneously ran an accelerated scrappage programme retiring five million petrol bikes over five years, the cumulative electric fleet would reach 10 million units by 2031.

At a conservative 102 litres of petrol displaced per bike per year, that is 1.02 billion litres of avoided petrol imports annually, worth $613 million every year. The policy levers are also straightforward, including incentives for local manufacturers for e-motorcycles, with necessary sunset clauses, a petroleum development levy (PDL)-funded purchase subsidy and a registration ban on new petrol two-wheelers from 2030. Vietnam is implementing exactly this playbook.

Secondly, complete tubewell solarisation. Pakistan has 1.08 million diesel tubewells. Scaling to all 1.08 million, with federal or provincial co-financing, and a standardised 10-15 kilowatt solar specification, would eliminate 3.21 billion litres of diesel consumption annually. That is 2.7 million metric tonnes, worth $2.2 billion per year in avoided imports. The payback is under one year on a dollar-for-dollar import-substitution basis.

But solarisation without water governance is a trap. Academic research from the Lower Indus Basin confirms that solar-powered pumps extract more groundwater than diesel equivalents because the marginal cost of pumping drops to near zero. Free energy means free water, and free water means depleted aquifers. The solution is not to slow solarisation — it is to pair every solar tubewell with a mandatory volumetric flow metre, linked to a telemetry system that caps extraction at agronomically determined thresholds per acre.

The cost per metre of such a flow metre is nominal and can be bundled with the cost of solar transition. The cost of losing the Indus Basin’s aquifer is incalculable. A smart solar tubewell is not just an energy intervention — it is the first serious instrument of groundwater governance Pakistan has ever deployed at scale.

Together, these two interventions at full scale displace 3.47 million metric tonnes of petroleum products annually, 4.24 billion litres, worth $2.8 billion per year. Over five years, the cumulative savings reach $13.9 billion. That is 20 percent of Pakistan’s current combined petrol and diesel consumption, eliminated through just two interventions alone.

The total public investment for aggressive e-motorcycle conversion and complete tubewell solarisation is approximately $2.8 billion over five years. The return is $13.9 billion in avoided imports. That is a five-to-one multiplier. No IMF programme, no structural adjustment, no bilateral aid package in Pakistan’s history can offer a return this favourable.

The constraint is not money. It is the willingness to issue a regulatory order that says: from this date forward, every new motorcycle is electric, and every diesel tubewell gets a solar panel and a water metre.

A CHOICE, NOT A FORECAST

Back at the petrol station on Multan Road, Ahmed does not think about trade deficits or electro-tech cost curves. He thinks about the Rs6,000.

He thinks about whether to fill the tank, or buy groceries, or pay the school fees of his children. He does not know that an electric motorcycle would save him Rs3,000 a month, or that the grid has enough surplus power to charge every bike in Lahore without building a single new power plant. Nobody has told him. Nobody has given him the option.

That is the indictment. The technology does exist, the financing is available and the demand is there to be tapped. The indictment is that 30 million motorcycle riders, a million farmers with diesel pumps, and 240 million citizens breathing diesel-fouled air have been offered no alternative because the policy machinery has not moved, or has been too passive to care. Why would the policy machinery care when they do not ride a bike to work like the masses?

Pakistan has a choice. It can continue importing 14 billion dollars of petroleum annually, absorbing oil shocks reactively, patching fiscal holes with ad-hoc subsidies and watching every regional comparator pull ahead. Or it can enable investment in an electrification strategy that pays for itself within an electoral term, reduces the import bill by 15 percent and converts idle power plants from fiscal liabilities into productive assets.

This is a structural pivot. The electro-tech economics makes sense and the infrastructure base already exists. We just have to move now and not be bogged down by indecision.

Ahmed will not wait forever. Neither will the balance of payments.

The writer is a macroeconomist and professor of practice at IBA, Karachi.
He can be reached at ammar.habib@gmail.com

Published in Dawn, EOS, April 12th, 2026