Energy has always been the backbone of any nation’s economic growth. For Pakistan, chronic energy shortages have long hindered industrial development, disrupted daily life, and strained the economy. The China Pakistan Economic Corridor (CPEC) sought to reverse decades of underinvestment in power infrastructure by launching an ambitious portfolio of energy projects that aim to provide affordable, reliable, and diversified energy across the country. These projects span coal, hydropower, solar, and gas sectors, transforming both Pakistan’s energy mix and its economic potential.
This article explores how CPEC’s energy initiatives have reshaped Pakistan’s power sector, focusing on their origins, progress, and the “before and after” impact on affordability, load shedding, and debt.
The Pre-CPEC Energy Crisis: A Nation in the Dark
Before CPEC, Pakistan was caught in one of the worst energy crises in South Asia. The country faced severe power shortages, with electricity demand consistently outpacing supply by 4,000 to 6,000 megawatts during peak periods. Load shedding was a daily reality, lasting up to 12–16 hours in rural areas and 8–10 hours in urban centers. Industrial output was crippled, foreign investors were discouraged, and small businesses suffered major losses.
Electricity prices were rising rapidly, driven by inefficiencies in generation, outdated infrastructure, and dependence on imported furnace oil. More than 60 percent of the country’s electricity was generated from thermal power plants running on expensive imported fuels, making the economy vulnerable to global oil price fluctuations. Hydropower, which could have offered a cheaper and cleaner alternative, had been neglected due to political instability and long project timelines.
The circular debt, which is a persistent financial shortfall in the power sector caused by nonpayment of dues between producers, distributors, and the government exceeded 400 billion Pakistani rupees by 2013. Frequent blackouts led to public unrest, and many analysts believed that without a structural overhaul, Pakistan’s economy would stagnate.
This was the situation when CPEC was launched in 2015, offering not just funding but also a blueprint for energy revival.
Coal-Fired Power Plants: Bridging the Immediate Energy Gap
One of the first priorities under CPEC was to ensure energy sufficiency, even if it required reliance on coal in the short term. Several coal-fired power plants were established, including the Sahiwal Coal Power Project in Punjab and the Hubco Coal Power Project in Balochistan. These plants collectively added thousands of megawatts to the national grid, providing instant relief from crippling shortages.
The Sahiwal Coal Power Project, with a capacity of 1,320 megawatts, became operational in record time. Similarly, the Hub Power Plant added another 1,320 megawatts, using imported coal through Gwadar Port. These facilities improved the reliability of electricity supply across industrial hubs like Lahore, Faisalabad, and Karachi.
However, while these projects helped eliminate load shedding, they also raised concerns about environmental sustainability and import dependency. The use of imported coal exposed Pakistan to global price volatility, while emissions from coal plants sparked debates over climate commitments.
Nevertheless, the immediate outcome was a visible improvement in power availability. Factories that once operated only part-time due to electricity rationing could now run at full capacity, helping Pakistan’s GDP growth rebound in the years following CPEC’s initiation.
Hydropower Projects: Moving Toward Cleaner Energy
Recognizing that coal was a temporary fix, CPEC also emphasized hydropower projects to harness Pakistan’s vast water resources. Among these, the Dasu Hydropower Project, Karot Hydropower Project, and Suki Kinari Hydropower Project stood out.
These projects are strategically located along the Indus River and its tributaries, designed to produce clean and renewable electricity while reducing dependence on imported fuels. For example, the Karot Hydropower Project generates 720 megawatts of electricity, supplying millions of homes with low-cost power. Similarly, the Suki Kinari plant in Khyber Pakhtunkhwa contributes another 870 megawatts.
Before these projects, hydropower contributed only around 30 percent of Pakistan’s electricity generation. The expansion under CPEC is expected to push that share significantly higher, reducing both the cost of electricity and environmental impact over time.
Hydropower has also provided a buffer against fuel price fluctuations, which previously caused electricity tariffs to rise unpredictably. The long-term affordability of hydroelectric power has made it a cornerstone of Pakistan’s energy transition strategy.
Renewable Energy: Solar and Wind for a Sustainable Future
Another critical component of CPEC’s energy vision is renewable energy. Projects like the Quaid-e-Azam Solar Park in Bahawalpur have become symbols of Pakistan’s shift toward cleaner, sustainable energy sources. With an installed capacity of over 1,000 megawatts, the solar park is one of the largest in Asia.
In addition to solar, several wind power projects in Sindh’s Jhimpir corridor have been developed in collaboration with Chinese and local firms. These renewable energy sources have helped diversify the national energy mix while contributing to Pakistan’s commitments under international climate agreements.
Before CPEC, renewables accounted for less than 2 percent of total electricity generation. Now, that figure is steadily increasing, helping Pakistan gradually reduce its carbon footprint.
Gas and LNG Infrastructure: Fueling Industrial Growth
Beyond electricity generation, CPEC investments extended to the development of gas pipelines and liquefied natural gas (LNG) terminals. These projects aimed to address shortages in industrial gas supply and support urban heating and transportation needs.
The construction of LNG terminals has enabled Pakistan to import gas more efficiently, providing much-needed fuel for power plants and manufacturing industries. Moreover, the development of gas pipelines has improved regional energy distribution, connecting resource-rich areas like Balochistan to industrial zones in Punjab and Sindh.
This infrastructure has strengthened Pakistan’s energy security by reducing reliance on a single fuel source.
The Aftermath: Comparing Before and After CPEC
The difference between the pre- and post-CPEC energy landscape is remarkable. Load shedding, once an accepted part of daily life, has been virtually eliminated in major cities. Power generation capacity increased from around 22,000 megawatts in 2013 to over 36,000 megawatts by 2022.
Electricity prices have stabilized, although they remain sensitive to global fuel prices due to imported coal and LNG usage. Industrial productivity has improved, and new businesses have flourished in areas once paralyzed by blackouts. Rural electrification has expanded, connecting millions of households that previously relied on kerosene or diesel generators.
However, these improvements have not come without challenges. The cost of financing CPEC energy projects has added significantly to Pakistan’s external debt. Power purchase agreements often guarantee high returns to investors in foreign currency, which puts pressure on Pakistan’s fiscal resources when the rupee depreciates.
Additionally, the reliance on imported coal and LNG means that the benefits of CPEC’s energy transformation are partly offset by exposure to international market risks. Policymakers are now focusing on increasing the share of domestic resources, including Thar coal and hydropower, to improve long-term sustainability.
Affordability and Debt Implications
While electricity supply has improved, affordability remains a concern. Many CPEC power plants were financed through loans with guaranteed returns, meaning Pakistan must make regular payments in foreign exchange. This has increased the overall cost of electricity production.
The circular debt has persisted, rising above 2.3 trillion rupees in recent years, mainly due to inefficiencies in billing and transmission losses. However, it is important to note that without CPEC’s intervention, Pakistan’s economic losses due to power outages would have been far greater.
The challenge now lies in restructuring tariffs, improving governance, and renegotiating contracts to balance investor confidence with consumer affordability.
Long-Term Outlook: Toward Energy Independence
CPEC’s energy projects have undoubtedly provided Pakistan with a foundation for future growth. The next phase should focus on integrating renewable sources, modernizing transmission networks, and expanding domestic coal and gas utilization to reduce imports.
The government’s recent emphasis on green energy and public-private partnerships indicates a strategic shift toward sustainability. By gradually replacing imported coal with local resources and scaling up solar and hydropower, Pakistan can achieve energy independence within the next two decades.
CPEC has also inspired regional cooperation in energy trade, as Pakistan explores electricity imports from Central Asia through projects like CASA-1000. This interconnected approach could further stabilize prices and strengthen Pakistan’s position as a regional energy hub.
Conclusion
CPEC’s energy portfolio has transformed Pakistan from a nation plagued by power shortages into one with surplus generation capacity. The journey from prolonged blackouts to round-the-clock electricity reflects not only the success of infrastructure development but also the broader economic revival it enabled.
While challenges related to affordability, debt, and environmental sustainability remain, the benefits are undeniable. Industries have revived, exports have increased, and millions of citizens now enjoy uninterrupted power.
The story of CPEC’s energy transformation is a testament to the power of strategic investment and international partnership. It highlights how a country once trapped in darkness can illuminate its path to progress when vision, infrastructure, and policy align.
In the coming years, the key will be to build on this progress, not just by expanding capacity, but by ensuring that the energy driving Pakistan’s growth is clean, affordable, and sustainable.
