Pakistan’s Domestic Power Sources Cushion LNG Supply Risk as Middle East Crisis Deepens

With 74% of electricity already generated at home and a roadmap to near-total energy self-reliance by 2034, Islamabad is repositioning itself as a rare emerging-market success story in the age of fossil-fuel fragility — but the solar revolution’s policy fault lines could yet undermine the gains.

A decade ago, Karachi spent summers in rolling darkness. Neighbourhoods that once hummed with air-conditioners fell silent for eight, ten, sometimes sixteen hours a day as grid power buckled under demand it could not meet. Today, those same rooftops bristle with solar panels — a bottom-up energy revolution, bought with household savings rather than state subsidies, that is quietly redrawing Pakistan’s geopolitical calculus at exactly the moment the Middle East is on fire.

In an exclusive interview with Reuters published on March 13, 2026, Power Minister Awais Leghari disclosed for the first time that approximately 74% of Pakistan’s electricity now comes from indigenous sources — solar, wind, nuclear, local coal, and hydropower — and that the government aims to push that figure above 96% by 2034. The numbers, Leghari said, had not been previously reported publicly. They matter enormously, because they reframe Pakistan not as a fragile LNG-dependent economy at the mercy of Qatari tanker routes, but as a country that has quietly — and largely organically — engineered a buffer against the precise geopolitical shock now rattling energy markets from the Persian Gulf to the Bay of Bengal.

“Pakistan has been steadily increasing its reliance on indigenous energy resources, and about 74% of our electricity generation now comes from local sources.” — Power Minister Awais Leghari, Reuters, March 2026

The LNG Equation: Marginal, Not Existential

Liquefied natural gas now accounts for roughly 10% of Pakistan’s power generation, down sharply from the 20%-plus share it commanded as recently as 2020-2023, according to Central Power Purchasing Agency data cited by Argus Media. Even within that shrinking slice, LNG’s role is increasingly narrow: it fires peaking plants that bridge the gap between sundown and the moment batteries or hydropower pick up the slack. ‘Even if LNG was disrupted or became too expensive,’ Leghari told Reuters, ‘the impact on production capacity, industry or agriculture would be minimal.’

That is a strikingly confident assertion from a minister whose country once scrambled for spot cargoes at crisis prices. Its credibility rests on arithmetic. If LNG were to disappear entirely from Pakistan’s grid for several months, Leghari acknowledged, the worst-case outcome would be one to two hours of load-shedding during peak summer evenings — primarily in urban residential areas, leaving industry and agriculture unaffected. Battery-storage projects currently in development are designed to shift excess daytime solar production into those very evening windows, eroding even that residual vulnerability.

The contrast with the early 2020s is stark. When Europe’s post-Ukraine energy scramble pulled LNG cargoes away from the developing world in 2022, Pakistan issued tender after tender that went unanswered, triggering blackouts of eight hours or more. The Institute for Energy Economics and Financial Analysis (IEEFA) warned then that rising LNG dependence was “a recipe for high costs, financial instability, and energy insecurity.” The recipe, it appears, has been quietly discarded.

Why Pakistan Cancelled 21 LNG Cargoes and Why That Is the Good News

In a signal that would have seemed surreal in 2022, Pakistan formally cancelled 21 LNG cargoes due under a long-term supply agreement with Italy’s Eni for 2026-27. The reason was not fiscal distress but surplus: domestic power generation and accelerating solar uptake had simply eroded the demand that LNG was meant to serve. Pakistan had already requested QatarEnergy, its primary supplier, to divert 24 cargoes from its 2026 delivery schedule back into the global market for resale, according to Gas Outlook, a London-based industry publication.

This is an extraordinary pivot. The country that was once described as a key source of incremental LNG demand — and that signed long-term contracts with Qatar and Eni to guarantee supply — is now paying capacity charges on fuel it does not need. Argus Media reported last October that regasified LNG had already fallen in Pakistan’s grid merit order, with coal and renewables displacing it even before the current Hormuz tensions. The geopolitical crisis has not created Pakistan’s energy resilience; it has merely revealed it.

The People-Led Solar Revolution: Scale the Statistics Cannot Capture

The most dramatic driver of Pakistan’s energy self-reliance is one that no government planned and no regulator foresaw: a mass adoption of rooftop solar, driven by household desperation in the face of soaring tariffs and frequent outages. Between 2019 and 2025, cumulative solar panel imports surpassed Pakistan’s total installed power plant capacity by two gigawatts — and most of it was not utility-scale but residential, installed on millions of individual rooftops from Karachi to Gilgit.

By April 2025, net-metered rooftop solar capacity had reached 5.3 GW, nearly a tenfold increase in just two years. Pakistan imported 17 GW of solar panels in 2024 alone — twice the volume of 2023 — making it the world’s largest importer of photovoltaic panels that year, according to REN21’s Global Status Report. Solar is now estimated to account for more than 25% of total national electricity production. The World Resources Institute noted that what began as an incentive programme in 2015 became a ‘mass phenomenon’ driven not by climate idealism but by economic survival — making Pakistan a rare case study in market-led energy transition within a lower-middle-income economy.

According to NEPRA data compiled by AHL Research, net metering output (excluding Karachi) surged from roughly 80 GWh per month in late 2024 to an average of 174 GWh per month by mid-2025, peaking above 300 GWh in April during peak sunlight hours. The consequence for the national grid is a transformed daytime load profile: afternoon demand valleys that once strained planners are now filled with cheap, distributed, domestic solar generation — exactly the kind of output that displaces LNG peaking plants.

In 2024, Pakistan imported more solar panels than any other country in the world — 17 GW of capacity, double the volume of 2023. The revolution was bought not with climate finance but with household savings.

The Broader Mix: Hydro, Nuclear, Coal — and CPEC’s Dividend

Solar is the most visible element of Pakistan’s indigenous energy story, but it is not the whole picture. Hydropower from rivers fed by Himalayan glaciers has long anchored Pakistan’s base load, with large facilities on the Indus and its tributaries providing stable, zero-fuel-cost generation. Nuclear power, expanded under successive civilian and military governments and built largely with Chinese cooperation, contributes a growing share of clean dispatchable capacity. Local coal — from the vast Thar coalfields in Sindh — provides a domestic alternative to imported fuel that, whatever its climate implications, adds to the self-reliance equation.

The China-Pakistan Economic Corridor (CPEC) has played an understated but significant role. Chinese investment in wind farms in Jhimpir (Sindh) and solar parks in Punjab helped build the utility-scale clean energy backbone alongside which the rooftop revolution has unfolded. With 55% of Pakistan’s electricity already coming from clean sources — and a target of above 90% by 2034 — CPEC’s energy legacy is, paradoxically, a green one. ‘The people-led solar revolution, and earlier decisions to invest in nuclear, hydropower and local coal,’ Leghari told Reuters, ‘have all played a role in increasing Pakistan’s self-reliance.’

The Hormuz Threat: Real But Contained

The geopolitical backdrop to Leghari’s disclosure is not abstract. A widening US-Israel conflict with Iran has placed Gulf energy infrastructure under unprecedented pressure. Iraqi Kurdistan’s oil fields suspended production in early March 2026 as a precautionary measure following Iranian drone activity in the region. Qatar — the world’s second-largest LNG producer after the United States, and Pakistan’s primary supplier — ships its cargoes through the Strait of Hormuz, the 21-mile chokepoint that Iran has repeatedly threatened to close.

Pakistani textile exporters’ lobby APTMA warned as recently as March 4, 2026 that constricted Gulf energy supplies were raising power costs and threatening export competitiveness. The industry association urged the government to remove production caps on domestic gas fields and allocate additional local gas to the power sector as a hedge. Leghari’s Reuters interview, timed to coincide with precisely this period of anxiety, appears calibrated to send a stabilising signal to markets: the risk is acknowledged but contained.

The arithmetic supports the reassurance. If LNG at 10% of generation were fully disrupted, the direct hit to electricity output would be material but not catastrophic — particularly when distributed solar, which generates during the daytime hours when industrial and commercial demand peaks, can absorb much of the slack. The remaining vulnerability sits in summer evenings, when air-conditioning load surges after dark. Battery storage, currently being deployed at scale, is the missing link that closes even that window.

Investment Implications: What the Numbers Mean for Capital

For international investors, Leghari’s disclosures reshape the Pakistan energy risk narrative in several ways. First, the LNG import bill — which has been a persistent drain on foreign exchange reserves and a source of circular-debt accumulation in the power sector — is structurally declining. The government’s decision to cancel Eni cargoes and defer Qatar deliveries is not a credit event but a demand signal: domestic generation is crowding out imports faster than contracts anticipated.

Second, the regulatory risk around net metering is the most significant near-term investment uncertainty. NEPRA has been debating a shift from net metering to a gross-metering or net-billing regime that would cut the buyback tariff for surplus solar generation from roughly Rs 27 per kWh to Rs 10-11 per kWh for new users — a reduction of more than 60%. If implemented in full, the measure would extend payback periods for new rooftop installations from three to five years to seven or more, potentially slowing adoption. The Friday Times estimated in January 2026 that without amendment, cumulative cost-shifting from solar prosumers to non-solar consumers could reach $48 billion by 2034, a fiscal argument the government finds increasingly hard to ignore.

Third, battery storage represents the next major investment opportunity. If Pakistan is to convert its solar surplus into round-the-clock supply security — and use that supply security to justify retiring residual LNG dependency — grid-scale and distributed battery systems are the indispensable bridge technology. Chinese manufacturers, already deeply embedded in Pakistan’s panel supply chain, are positioning aggressively in this space.

Regional Comparisons: India, Bangladesh, and the South Asian Energy Race

Pakistan’s trajectory invites comparison with its regional peers. India has pursued a more explicitly state-directed renewable expansion, with utility-scale solar parks in Rajasthan and Gujarat underpinned by massive public investment and industrial policy. Its LNG import exposure is smaller in proportional terms but growing, as urban gas demand rises. Bangladesh, by contrast, remains dangerously dependent on a single LNG terminal and Qatari cargoes, with domestic renewable capacity still nascent — a position that looks increasingly fragile as Hormuz risks mount.

Pakistan’s model — messy, market-driven, policy-inconsistent, yet fast — offers a counterintuitive lesson for energy planners in the developing world: consumer desperation, when combined with collapsing technology costs, can achieve in three years what decade-long state strategies fail to deliver. The WRI’s analysis credits Pakistan’s solar revolution to ‘market forces rather than climate-driven or state-led green policies.’ That is simultaneously the model’s strength and its vulnerability: what the market built, the regulator can complicate.

The Road to 96%: Scenarios and Risks

Reaching 96% indigenous electricity by 2034 requires Pakistan to sustain and extend its clean energy momentum across three fronts: continued rooftop solar adoption (or its replacement by utility-scale equivalents if net metering is curtailed), aggressive battery-storage deployment to solve the evening peak problem, and expansion of nuclear and large hydro base load. The government has signalled intent on all three but has a mixed record on policy consistency.

The net-metering reform is the most immediate variable. If the buyback rate is cut sharply for new users without a clear transition to battery-storage subsidies or low-cost financing for prosumers, the bottom-up momentum that delivered 6 GW of rooftop capacity could stall. Conversely, a well-managed transition to gross metering — with storage incentives built in — could accelerate the shift from export-centric solar to self-consumption-plus-storage, which is more grid-stable and less prone to cost-shifting complaints.

A second risk is transmission infrastructure. Pakistan’s north-south grid bottlenecks — flagged by Leghari himself in 2025 — mean that cheap Thar coal and Indus hydro cannot always flow to where demand is highest. Solving this requires capital-intensive grid upgrades that have historically moved slowly through the bureaucratic and fiscal system.

A third and underappreciated risk is the one that the current geopolitical crisis ironically postpones: what happens when LNG prices collapse? If Middle East tensions abate and global LNG supply surges — as large new US and Qatari liquefaction projects come online — import prices could drop enough to make LNG competitive again with domestic solar on a levelled basis. Pakistan’s power sector, with its legacy capacity payment obligations to independent producers, would then face renewed pressure to dispatch expensive contracted fuel rather than cheap domestic generation. Managing that transition will require contract renegotiation at scale.

The solar revolution’s greatest irony: the policy most likely to slow it is not geopolitical disruption but domestic regulatory revision.

Conclusion: A Buffer Built by Necessity, Now Tested by Design

Pakistan’s power sector transformation is not the product of visionary planning. It is the product of crisis, survival instinct, and falling technology costs — a combination that has, almost accidentally, produced one of the most dramatic energy transitions in the developing world. What began as households in Karachi and Lahore installing solar panels to escape unaffordable grid bills has aggregated into a 6 GW distributed generation network that is reshaping the country’s geopolitical exposure.

Power Minister Leghari’s message to Reuters on March 13, 2026 is, at its core, a statement about how the energy security calculus has shifted. Pakistan remains exposed to Middle East volatility — as any country with trade routes through the Gulf must be — but the specific exposure to LNG supply disruption has been substantially reduced, faster than most observers realised, and through channels that had little to do with state energy policy. The buffer is real. Whether it can be preserved and deepened over the next eight years depends less on geopolitics than on whether Pakistan’s government can resist the temptation to over-regulate the bottom-up revolution that built it.