Pakistan’s dependence on imported oil is often described as an energy problem. That framework is too narrow. In reality, it is a structural characteristic of the economy, integrated into travel patterns, freight logistics and urban design.
As a result, every increase in global oil prices quickly translates into macroeconomic stress, rising external deficits, and rising inflation.
The electrification of transport is increasingly presented as the solution. Replace gasoline with electricity and Pakistan can reduce its import bill while absorbing excess energy capacity. The arithmetic seems convincing. But it is based on an incomplete diagnosis and, in some cases, a misleading comparison.
Three realities are often underestimated. First, Pakistan’s electricity system remains partly dependent on imported LNG and coal. Secondly, electric mobility is not just a fuel substitution, but a step from dependence on oil to dependence on batteries. Third, the narrative assumes that operational savings automatically translate into foreign exchange savings, ignoring capital imports and replacement cycles.
Electrification is not a simple exchange. It is a restructuring of the dependency. Transportation is based almost exclusively on oil. Gasoline powers motorcycles and cars, while diesel powers freight trucks that transport goods throughout the economy.
This creates a double vulnerability: households face oil crises, while transportation costs transmit diesel prices to inflation of food and industrial inputs. Pakistan is structurally exposed to global oil markets beyond its control.
Electricity is more flexible. It is generated from hydroelectric, nuclear, solar, wind, national gas and imported fuels. But diversification is not the same as autonomy. Flexibility does not eliminate external dependence. Electrification replaces a single point vulnerability with a multi-source system. But this only improves resilience if the dependencies are not recreated elsewhere.
Electric vehicles are much more energy efficient than internal combustion engines. Gasoline engines waste most of their energy as heat, while electric motors convert a much larger proportion into motion. Even with some imported fuel for electricity generation, energy per kilometer drops dramatically. This is the strongest technical argument in favor of electrification.
But it is often misinterpreted as a macroeconomic solution to reduce dependence on imports. Efficiency reduces energy intensity; it does not automatically reduce exchange rate exposure.
If electricity demand grows through the import of LNG, coal or new capacity with embedded foreign exchange costs, the external gain becomes uncertain. The assumption of “idle capacity utilization” also requires caution. Pakistan’s electricity system has surplus capacity, but is subject to high fixed-cost contracts.
EV charging can improve utilization, but it does not eliminate capacity payments or structural inefficiencies. Therefore, earnings are conditional, not automatic. At this point, the issue of battery becomes decisive. An electric vehicle is not just a different transmission; 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 cost and most of the imported value. Unlike gasoline bikes, which generate ongoing fuel imports, e-bikes require initial battery imports, periodic replacement, and continued reliance on global cell supply chains, even if assembly is local.
The same challenge is magnified in the freight transportation sector. Diesel trucks are the backbone of logistics, transporting agricultural products, industrial inputs and imports over long distances. The electrification of this segment is not gradual; requires high-capacity batteries, corridor-based charging infrastructure, and grid stability at scale.
These systems are capital intensive and rely heavily on imports in the early stages. Without a freight transport transition strategy, electrification risks being confined to urban mobility and leaving the most oil-intensive segment untouched.
This shifts the dependency from a flow problem to a stock and cycle problem. It also exposes a weakness in narratives focused on operating cost savings. Those savings are real at the user level, but they do not automatically translate into macroeconomic relief if charging and battery supply chains remain externally anchored. A cheaper vehicle is not necessarily part of a system that reduces dependence on oil at scale.
Vietnam illustrates this clearly. Their transition to electric two-wheelers is often considered a success based on costs, but the real lesson is sequencing. It started with imported batteries and components while developing assembly capacity and supporting domestic companies. Over time, local integration gradually increased. 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 a long-term industrial strategy, scale and state-backed financing. The issue is not replication (Pakistan cannot replicate it) but contrast. Without at least partial capacity development, countries run the risk of permanently depending on the most critical node of the value chain.
For Pakistan, the key issue is the net foreign exchange impact. Electrification reduces oil imports, but increases exposure to battery imports, freight electrification costs, global supply chains and replacement cycles. The outcome depends on whether the savings from reducing fuel imports outweigh the costs implicit in batteries, trucks and grid upgrades.
That balance can be positive, but only under certain conditions: a high utilization of two- and three-wheeled vehicles, a gradual transition of freight transport, a fall in battery costs and a gradual addition of internal value. Without them, the benefits remain limited.
The limitations are real. Pakistan lacks lithium reserves and a mature battery or electric load transportation ecosystem. Fiscal space is limited and institutions are unequal. But it also has advantages: a large two- and three-wheeler market, a vast 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 as a piecemeal substitution.
In the short term, imports of battery cells are inevitable. But Pakistan can still localize battery pack assembly, develop battery management expertise, standardize formats, and build repair and renewal systems. These steps determine whether value capture increases or remains externally concentrated. Recycling is particularly important.
As the stock of batteries grows, so does the potential to recover valuable materials domestically, creating a partial hedge against imports.
Business models will be important. Battery swapping systems, if standardized early, can centralize ownership, enable mass procurement, improve utilization, and reduce upfront costs. But they require coordination and regulatory clarity; Otherwise, fragmentation will erode scale advantages, especially in freight transportation, where standardization is more difficult but more impactful.
Electrification cannot succeed in isolation either. Without broader reform of the system, progress will be limited. Urban mobility must shift towards mass transportation. Freight transport must gradually shift from road to rail to reduce dependence on diesel and improve efficiency. The electricity sector must evolve through time-of-use pricing, the expansion of renewable energy and better grid management.
Financing mechanisms, such as microleasing and pay-as-you-go systems, will determine whether adoption is widespread or limited. The biggest risk is not failure, but poor performance when electrification grows in cities but leaves transportation, logistics and structural dependence on oil largely intact. This pattern is already visible globally, where technology adoption outpaces system transformation.
Therefore, electrification is not simply a fuel substitution. This is a structural transition that reduces energy intensity, diversifies sources and allows industrial modernization in both consumption and charging systems. But it only offers systemic benefits if managed as such. The dependence on oil is rigid and externally determined.
The reliance on batteries and freight transportation is more complex but more moldable if policies, scale and coordination are aligned. The choice is not between dependence and independence. It is a static system locked in a single vulnerability and a dynamic system capable of evolving towards resilience.
Electrifying transportation without addressing batteries, transportation, and systems integration risks moving from one trap to another. Made with intention, it offers a rare opportunity to reshape Pakistan’s economic trajectory. The limitation is not the technology. It’s execution and consistency.
The writer is former director of emerging markets investments at Citigroup and author of ‘The Gathering Storm’.
Disclaimer: The views expressed in this article are those of the writer and do not necessarily reflect the editorial policy of PakGazette.tv.
Originally published in The News
