Pakistan’s dependence on imported oil is often described as an energy problem. That frame is too narrow. It is in fact a structural feature of the economy – embedded in commuting patterns, freight logistics and urban design.
As a result, any increase in global oil prices quickly translates into macroeconomic stress, increasing external deficits and fueling inflation.
Electrification of transport is increasingly presented as the solution. Replace gasoline with electricity and Pakistan can reduce its import bill while absorbing excess power capacity. The calculation seems convincing. But it rests on an incomplete diagnosis and in some cases a misleading comparison.
Three realities are often understated. First, Pakistan’s electricity system remains partially dependent on imported LNG and coal. Second, electric mobility is not just a fuel substitution, but a shift from oil dependence to battery dependence. Third, the narrative assumes that operational savings automatically translate into foreign exchange savings, ignoring capital imports and replacement cycles.
Electrification is not a simple switch. It is a restructuring of the addiction. Transport is almost entirely oil-based. Gasoline powers motorcycles and cars, while diesel fuels trucks that transport goods across the economy.
This creates a double vulnerability: households face petrol shocks, while freight costs pass diesel prices on to food inflation and industrial inputs. Pakistan is structurally exposed to global oil markets beyond its control.
Electricity is more flexible. It is generated from hydro, nuclear, solar, wind, domestic gas and imported fuel. But diversification is not the same as autonomy. Flexibility does not eliminate external dependence. Electrification replaces a single point of vulnerability with a multi-source system. But this only improves resilience if dependencies are not recreated elsewhere.
Electric cars are far more energy efficient than combustion engines. Gasoline engines waste most energy as heat, while electric engines convert a much higher proportion into motion. Even with some imported fuel for electricity production, the energy per kilometer strongly. This is the strongest technical argument for electrification.
But it is often misunderstood as a macroeconomic solution to reduce import dependence. Efficiency reduces energy intensity; it does not automatically reduce currency exposure.
If demand for electricity grows through imported LNG, coal or new capacity with built-in foreign exchange costs, the external gain becomes uncertain. The assumption of “empty capacity utilization” also requires caution. Pakistan’s electricity system has excess capacity, but it is locked into contracts with high fixed costs.
Electric vehicle charging can improve utilization, but it does not remove capacity payments or structural inefficiencies. Winnings are therefore contingent, not automatic. At this point the battery issue becomes crucial. An electric vehicle is not just a different powertrain; it is a battery-centric system where costs, supply chains and external dependencies converge.
In Pakistan’s dominant motorcycle segment, batteries account for a large portion of the vehicle’s cost and the most imported value. Unlike gasoline bikes, which create continuous fuel imports, electric bikes require upfront importation of batteries, periodic replacement, and ongoing reliance on global cell supply chains, even if assembly is local.
The same challenge is magnified in shipping. Diesel trucks are the backbone of logistics, moving agricultural goods, industrial inputs and long-distance imports. Electrification of this segment is not incremental; it requires high-capacity batteries, corridor-based charging infrastructure and grid stability at scale.
These systems are capital intensive and highly import dependent in the early stages. Without a freight transition strategy, electrification risks remaining limited to urban mobility while leaving the most oil-intensive segment untouched.
This shifts dependency from a flow problem to a stock-and-cycle problem. It also reveals a weakness in narratives focused on ongoing cost savings. These savings are real at the user level, but they do not automatically translate into macroeconomic relief if freight and battery supply chains remain externally anchored. A cheaper vehicle is not necessarily part of a system that reduces oil dependence on a large scale.
Vietnam illustrates this clearly. Its move into electric two-wheelers is often seen as a cost-driven success, but the real lesson is sequencing. It began with imported batteries and components while building assembly capacity and supporting domestic firms. Over time, it gradually increased local integration. Dependency was managed and reduced through industrial policy, not eliminated through adoption alone.
China represents a different scale. Its battery ecosystem is vertically integrated across raw materials, cell production, vehicle manufacturing and supply chains. This was not market-driven, but the result of long-term industrial strategy, scale and government-backed financing. The point is not replication – Pakistan cannot replicate it – but contrast. Without at least partial capacity building, countries risk permanent dependence at the most critical node in the value chain.
For Pakistan, the key issue is the net effect of foreign exchange. Electrification reduces oil imports but increases exposure to battery imports, freight electrification costs, global supply chains and replacement cycles. The outcome depends on whether savings from reduced fuel imports exceed the costs in batteries, trucks and grid upgrades.
That balance can be positive, but only under conditions: high utilization of two- and three-wheelers, a gradual freight transition, falling battery costs and gradual domestic value addition. Without these, gains remain limited.
Limitations are real. Pakistan lacks lithium reserves and a mature battery or electric cargo ecosystem. The fiscal room for maneuver is narrow and the institutions are uneven. But it also has advantages: a large two- and three-wheeler market, a large truck sector under cost pressure, existing assembly capacity and strong incentives to reduce oil imports. The question is whether electrification is treated as an industrial transformation or a fragmented substitution.
In the short term, the import of battery cells is inevitable. But Pakistan can still localize battery pack assembly, develop battery management expertise, standardize formats and build repair and refurbishment systems. These steps determine whether value capture increases or remains externally concentrated. Recycling is particularly important.
As the battery stockpile grows, so does the potential to recover valuable materials domestically, creating a partial hedge against imports.
Business models will matter. Battery exchange systems, if standardized early, can centralize ownership, enable bulk purchasing, improve utilization and lower upfront costs. But they require coordination and legislative clarity; otherwise, fragmentation will erode economies of scale, especially in shipping, where standardization is more difficult but more effective.
Electrification cannot succeed in isolation either. Without a broader system reform, the gains will be limited. Mobility in the cities must shift towards mass transport. Freight must be gradually moved from road to rail to reduce diesel dependency and improve efficiency. The electricity sector must develop through time-use pricing, expansion of renewable energy and improved grid management.
Financing mechanisms such as micro-leasing and pay-as-you-go systems will determine whether adoption is broad or narrow. The bigger risk is not failure but underperformance, where electrification grows in cities but leaves freight, logistics and structural oil dependency largely intact. This pattern is already visible globally, where technology adoption is outpacing system transformation.
Electrification is therefore not just fuel substitution. It is a structural transition that reduces energy intensity, diversifies sources and enables industrial upgrading across both consumer and freight systems. But it only provides systemic benefits if managed as such. Oil dependence is rigid and externally determined.
Battery and cargo dependency is more complex but more malleable if policy, scale and coordination are aligned. The choice is not between dependence and independence. It is between a static system locked in a single vulnerability and a dynamic system capable of evolving towards resilience.
Electrifying transport without addressing batteries, freight and system integration risks moving from one trap to another. Done with intent, it provides a rare opportunity to reshape Pakistan’s economic trajectory. The limitation is not technology. It is execution and coherence.
The author is a former head of Citigroup’s investments in growth markets and author of ‘The Gathering Storm’.
Disclaimer: The views expressed in this piece are the author’s own and do not necessarily reflect Pakinomist.tv’s editorial policy.
Originally published in The News
