IF there is one lesson that struggling economies like Pakistan must draw from the Middle East crisis, it is that relying on imported fossil fuels is not only an economic liability but also a strategic vulnerability. The energy shortages and price spikes triggered by the US-Israel war on Iran, and the shipping traffic disruptions in the Strait of Hormuz, have again underlined how exposed such economies are to external energy shocks. The need to expedite the transition to cheaper, cleaner and domestically available energy sources such as solar and wind could not be more urgent. Reducing reliance on imported fuels is essential to insulating economies from geopolitical disruptions that can lead to inflation and fiscal and social stress.

It is in this context that participants at a recent public dialogue on Pakistan’s energy security in Islamabad cautioned the government against imposing taxes on solar panels and storage systems. At the heart of the debate lies a clear policy contradiction: while there is growing realisation that Pakistan must transition to renewable energy and storage to shield the economy from external shocks, some within the government want to tax solar imports to raise revenue. This tension points to a broader lack of coherence in energy policymaking. The case against taxing solar technologies is based on economic evidence. In recent years, massive rooftop solar adoption, driven largely by households and industry, has acted as a structural hedge against energy price volatility. Since 2018, this largely people-led solar expansion has helped Pakistan avoid some $12bn in oil and gas imports, easing pressure on the import bill while strengthening energy security. Ready access to affordable Chinese technology makes a compelling case for solar adoption for the broader economy and consumers, including households, farmers and businesses grappling with high tariffs and unreliable grid supply. Yet adopting solar alone without battery storage is not enough. To maximise the benefits of the transition, the government must encourage pairing renewable generation with storage solutions to further reduce reliance on imported fuels and tackle intermittency to ensure availability of renewable power even after sunset in summer when demand peaks. The next federal budget presents an opportunity to correct course by aligning fiscal policy with long-term energy security, affordability and climate-resilience goals.

Published in Dawn, April 12th, 2026

© Dawn