Pakistan’s Electricity Surplus Is a Geopolitical Orphan
Bibek Raj Kandel and Christina Monroe
Abstract: Pakistan’s electricity story has taken an unusual turn. After years of shortage, the country now has more power than it can easily use, a shift made possible in large part by rapid capacity expansion under CPEC. But with institutions and regional integration lagging behind generation, that surplus has started to look like a geopolitical orphan: abundant, costly, and not quite claimed by anyone, a pattern that’s becoming increasingly familiar across South Asia.
Full text: Pakistan today sits in a paradox that few developing countries ever reach: it has more electricity than it can consume, yet neither the domestic system nor the regional order allows it to turn that surplus into advantage. Installed capacity has climbed past 44,000 megawatts, while peak demand struggles to cross 29,000. That gap is widening.
The Belt and Road Initiative, with the China–Pakistan Economic Corridor (CPEC) as one of its most consequential components, brought Pakistan out of an era of chronic electricity shortages with notable speed. But the manner in which this capacity was built also reshaped the country’s energy and geopolitical constraints in ways that are now difficult to unwind. Pakistan’s experience offers a revealing window into how infrastructure diplomacy, when detached from institutions and markets, can generate abundance without leverage.
More capacity is still being added, coal plants on the Arabian Sea at Gwadar, new hydropower dams in the Himalayan foothills at Kohala and Azad Pattan, and expanded coal mining in the Thar desert, even as the system struggles to absorb another watt. This build-out continues as Pakistan’s ability to use its existing power steadily erodes.
This surplus is not an accident. It reflects two parallel responses colliding inside a system built for shortages but now grappling with abundance. Large-scale generation expanded rapidly under state-backed investment, while millions of Pakistani households and industries installed rooftop solar systems to escape rising tariffs. Pakistan imported more than 13 gigawatts of Chinese solar panels in the first half of 2024 alone, an unplanned, bottom-up revolution that now competes directly with the baseload capacity built earlier. The country is generating power at the top while avoiding the grid at the bottom. This is not the energy transition Pakistan imagined. It is a fragmented exit from a system the state increasingly struggles to sustain.
Yet capacity has never been Pakistan’s real constraint. Surplus power was supposed to end chronic blackouts, yet large parts of the country barely see it. National grid access averages around 90 percent, but in Balochistan it drops sharply, and in many mountain districts of Gilgit-Baltistan long outages remain the norm. Transmission losses remain among the highest in South Asia. What was built to stabilize the energy system has instead exposed deeper fractures between generation, distribution and governance. Pakistan has megawatts, but not the institutions, revenue base or physical networks to deliver electricity where it is actually needed.
Pakistan’s inability to turn this expanding capacity into influence reflects a deeper structural problem: while generation increased, the diplomatic and institutional mechanisms needed to trade electricity did not. To the west, Afghanistan, Iran and parts of Central Asia face chronic shortages. Iran confronts severe summer deficits. Turkmenistan and Uzbekistan struggle with winter shortfalls despite vast resources. To the east, India’s electricity demand continues to rise, particularly in western states such as Gujarat.
In principle, Pakistan is well positioned to serve as an energy corridor linking surplus and deficit regions. In practice, it is the only country in this neighborhood with no meaningful access to either grid. Cross-border electricity trade requires regulatory predictability, commercial clarity and political continuity, conditions that never fully emerged. Pakistan’s surplus therefore has nowhere to go. It has become a geopolitical orphan: abundant, stranded and structurally unclaimed.
CPEC moved fast. Between 2015 and 2023, Pakistan commissioned more than 8,000 megawatts of coal, LNG and hydropower capacity. Port Qasim, Sahiwal, Hub, Thar Blocks I and II, the Quaid-e-Azam Solar Park and the Matiari–Lahore transmission line reshaped the system in less than a decade. The next wave remains ambitious: the 1,124-megawatt Kohala hydropower project, the 700-megawatt Azad Pattan plant, expanded coal at Thar and a new plant at Gwadar. Pakistan is still building for a demand profile shaped by the early 2010s, when blackouts dominated daily life.
Demand, however, is not keeping pace. Industries that once relied on the grid are installing their own solar arrays. Households facing rising tariffs are doing the same. Rooftop photovoltaics have become an escape route from high prices and unreliable distribution networks. As more consumers exit the grid, Pakistan’s circular debt deepens and fixed charges rise on power that is never used. As much as half of the country’s generation now sits idle for much of the year. In 2025 alone, capacity payments are estimated to exceed US$7 billion, according to local media, even when electricity goes unused.
With export pathways blocked and internal transmission bottlenecks unresolved, Islamabad is turning inward. In March 2025, it established the Pakistan Crypto Council and earmarked up to 2,000 megawatts for data centres and bitcoin mining as part of a broader digitisation strategy, an attempt to find demand where markets and diplomacy have failed.
Pakistan’s domestic politics compound the problem. For decades, strategic decision-making has been shaped by a security-first policy framework that prioritised short-term stabilisation over long-term economic diplomacy. Electricity trade, however, depends on predictable regulation, commercial clarity and broad political legitimacy, conditions that are difficult to sustain amid frequent government turnover and shifting priorities. Within this institutional context, the mechanisms required for technocratic, civilian-led cross-border power trade have struggled to take root, limiting Islamabad’s ability to pursue cross-border electricity cooperation, including with India, despite energy trade in many regions functioning as a confidence-building instrument rather than a political concession.
CPEC emerged within this institutional context. Pakistan’s relationship with China has long been one of its most stable diplomatic alignments, providing the political comfort needed for an ambitious program of power plants, roads and transmission infrastructure. For Beijing, the first phase coincided with a period when state-owned enterprises were encouraged to seek overseas markets to absorb domestic overcapacity. For Pakistan, exhausted by years of load-shedding, rapid delivery took precedence over system flexibility. Today, however, the country confronts a different challenge: a large generation surplus alongside a severe foreign-currency crunch.
This dilemma is increasingly regional. South Asia is entering an era in which energy systems oscillate between abundance and scarcity because infrastructure expands faster than institutions can absorb it. Bangladesh faces rising LNG dependence as domestic gas fields decline. Sri Lanka’s LNG cooperation with India remains stalled. India hosts nearly 8 gigawatts of gas-fired plants that sit largely idle due to high fuel costs. Nepal, which banked on future exports to Bangladesh, now fears that Dhaka’s demand window may narrow amid price pressure and shifting regional dynamics.
Surplus power should strengthen a state. In Pakistan, it has revealed the limits of capacity built without integration. What was meant to mark a turning point, from chronic shortage to strategic flexibility, points to a harder truth: megawatts alone do not confer leverage. In a region where energy corridors are negotiated long before they are built, abundance without institutions offers little advantage. Until Pakistan can pair generation with systems that allow power to move across borders, markets and layers of governance, its surplus will remain abundant, costly and geopolitically unclaimed.
