- Pakistan’s energy future needs decentralized renewable integration, policy clarity, institutional support and governance frameworks
Pakistan’s gas sector was defined by enduring shortages, load shedding, and the search for emergency solutions to bridge the widening supply-demand gap for over a decade. Industries struggled to keep production timelines, households faced seasonal restrictions, and power plants increasingly relied on imported liquefied natural gas to offset declining domestic reserves. And yet, the national discussion has shifted dramatically. Pakistan is now experiencing a time of surplus gas, particularly except winter months of peak demand. This change indicates not only adjustments in supply but more importantly structural transformations in how energy is generated, consumed, and valued within the economy.
Present natural gas supply in Pakistan stands at approximately 3.8 billion cubic feet per day, supplying through national reserves and LNG imports. In case of continuation of the trend, total supply capacity could reach around 5 billion cubic feet per day by 2031. These projections suppose relative stability in domestic production decline rates and the continuation of long-term LNG contracting obligations.
However, while supply capacity may increase or remain steady, demand in the largest consumption sector (power) is undergoing visible contraction. The power system is gradually integrating more renewable energy, particularly solar, which is now substituting gas-based electricity during extended parts of the day. Simultaneously, overall electricity demand has reduced due to affordability constraints and slowed economic activity. Thus, the sector that formerly consumed Pakistan’s significant LNG import is now reducing its reliance on gas.
This evolving demand landscape has created a paradox: despite supply availability, portions of the system remain under-utilized. LNG cargoes have been deferred, and take-or-pay clauses have resulted in financial penalties when agreed quantities could not be utilized domestically. The government is negotiating with suppliers to reschedule or divert cargoes and revise pricing mechanisms to prevent additional fiscal strain.
Meanwhile, local exploration and production companies face uncertainty because their investment recovery depends on consistent and predictable offtake. Declining demand, if not managed in a broader aspect, risks discouraging future exploration and accelerating the decline of domestic reserves.
Yet even with surplus gas availability at the national level, distribution challenges continue to exist. Pakistan’s gas transmission network was developed gradually over decades, resulting in pressure inconsistencies across regions. LNG terminals operate within their capacity constraints, and the country lacks underground gas storage facilities that would allow surplus volumes to be shifted seasonally. The system remains designed for a centralized flow of gas from major ports and fields toward large industrial and urban loads. As a result, even when total supply appears adequate on paper, localized curtailments still take place. This reflects a deeper structural issue: physical infrastructure and governance frameworks have not been updated in-line with changes in supply mix and consumption patterns.
The shift from scarcity to surplus is another critical junction for national energy planning. It provides an opportunity to reassess priorities, re-evaluate technologies, and reimagine the role of gas in Pakistan’s future economy. Ongoing dependence on imported LNG in a volatile global market is neither economically secure nor strategically sustainable. At the same time, neglecting existing infrastructure and upstream investments would limit the country’s ability to respond to future demand recovery. The path forward needs balancing supply security with flexibility and diversification. One of the most potential avenues in this regard is the development of Bio-CNG as a renewable, decentralized, and locally sourced gas substitute.
Pakistan possesses abundant resources of biomass. More than 70 million tons of agricultural residues, along with significant livestock manure and organic municipal waste, are produced annually. Much of this biomass is either burned in fields or dumped unmanaged in landfills. These practices contribute substantially to air pollution, and greenhouse gas emissions. Converting this organic biomass into biogas and upgrading it into Bio-CNG not only reduces environmental degradation but generates an energy stream that can directly replace fossil natural gas. Bio-CNG can fuel transport vehicles, support industrial boilers, and supply commercial heating systems while significantly lowering greenhouse gas emissions. Because of its local and distributed production, it encourages energy value creation in rural regions rather than centralizing benefits near urban power center.
The development of Bio-CNG aligns naturally with the broader shift toward decentralization and renewable integration. Pakistan’s future energy stability will rely less on massive centralized generation assets and long-distance transmission networks; while more on modular, regionally adaptive, and community-anchored energy systems. Decentralized biogas plants, combined with solar generation and micro-grid infrastructure, create self-contained energy ecosystems that improve regional resilience. They overcome transmission losses, enhance rural economic participation, and ensure that productive sectors such as agriculture have access to reliable energy.
However, actualizing this potential requires policy clarity and institutional support. Pakistan’s existing gas pricing and allocation frameworks were structured for conventional natural gas and LNG, it do not address renewable gas injection. Clear standards are required to certify Bio-CNG quality for blending into pipelines. Similarly, long-term purchase agreements or tariff mechanisms must be established to ensure investor confidence. Municipalities and agricultural cooperatives will need structured feedstock supply partnerships to create predictable input streams for biogas facilities.
Financing mechanisms must be aligned to recognize Bio-CNG as both a climate mitigation solution and an industrial development opportunity, enabling access to green financing channels and carbon revenue opportunities. Most importantly, Bio-CNG must be formally recognized within national energy planning documents and climate policy frameworks to ensure alignment across ministries and authorities.
Energy transitions are engineered through deliberate choices. Pakistan’s ability to ensure affordability, secure supply, and environmental responsibility will depend on whether its policies anticipate the future or continue reacting to the past. The surplus moment is an opening. What matters now is whether it is used to build the foundation of a decentralized, renewable-integrated, and locally anchored energy system or whether it is allowed to pass without structural change.
Engr. Syed Wamiq Ali is a seasoned energy and environmental specialist, currently serving as a Lecturer at the Department of Development Studies, HANDS-Institute of Development Studies.