Pakistan's Rising Reliance on Imported Fossil Fuels Raises Economic Concerns

Pakistan's growing reliance on imported fossil fuels is making the economy increasingly vulnerable to global energy price swings and supply disruptions, even as renewable energy adoption continues to expand. According to the 'Renewables First, Pakistan Energy Market Review, 2026' (PEMR26) report, imported fossil fuels accounted for roughly 34 million tons of oil equivalent (Mtoe) in FY25, or 41 percent of the country's primary energy supply, up from 37 percent in FY24.

The shift comes as domestic production weakens. Local crude oil output fell 12 percent year-on-year in FY25, while domestic natural gas production dropped 8 percent. Meanwhile, imported crude oil covered 77 percent of the requirements of local refineries, highlighting how heavily the refining sector now depends on foreign supplies.

The report cautions that this dependence exposes Pakistan to international price increases, foreign exchange pressures and interruptions in global energy supplies, all of which can strain the country's finances and energy security.

To counter the trend, the report argues for expanding indigenous renewable energy sources, which it says can help reduce exposure as domestic fossil fuel production continues to decline.

The findings underscore a central policy challenge for Pakistan: managing a rising import bill for fuel while building a more diversified and resilient energy base for the future.