The petrol crisis that could electrify Pakistan

The impact of the ongoing US-Iran war on ordinary Pakistani households and business is already being felt. With petrol at Rs458 per litre and diesel at over Rs520, citizens are going to be facing real challenges once more.

For a country that only recently suffered inflation rates that peaked at 40 per cent, this conflict could not have come at a worse time. But the crisis can also be an opportunity for Pakistan, and given the bottom-up solar revolution the country has experienced over the last few years, the building blocks are already there for the country to be future ready.

Before getting into how this can be done, one must acknowledge that the government’s decision to pass on the price increase was the right call.

In a country with limited fiscal space, broad-based subsidies are a luxury Islamabad simply cannot afford. A prolonged subsidy program would hurt, not benefit, households and businesses because of the inflationary pressures that would have been created by an expanding fiscal deficit funded by creation of money supply.

But acknowledging fiscal reality does not mean turning a blind eye to human suffering. From the plumber in Karachi to the farmer in Punjab using a tractor in the upcoming wheat harvest, the impact on citizens’ wallets will be devastating. These are real people facing real pain, and policy focus must now shift towards ensuring that these citizens transition to a world where they are not vulnerable to energy price shocks due to the misadventures of other countries.

So what is the answer?

This is a theme I explored at length in my book, Future Ready: Innovation, Abundance, and the Global South. The argument is straightforward: countries like Pakistan cannot afford to remain tethered to a 20th-century energy model built on imported fossil fuels.

The volatility we are witnessing today — where a conflict can cripple the daily lives of 250 million people — is not an aberration. It is the norm in a world of chokepoints, geopolitical........

© Dawn Prism