In the current energy landscape, Pakistan is striving to reduce its reliance on imported fuels by accelerating the development of indigenous energy resources. This includes fast-tracking hydropower projects and expanding renewable energy capacity through wind and solar photovoltaic systems. A central pillar of this transition is the indigenisation of electrical equipment, components, and materials required for power generation, transmission, and distribution — an area that has long remained heavily import-dependent despite the country’s latent industrial capacity.
ENERGY LANDSCAPE
In the current energy landscape, Pakistan is striving to reduce its reliance on imported fuels by accelerating the development of indigenous energy resources. This includes fast-tracking hydropower projects and expanding renewable energy capacity through wind and solar photovoltaic systems. A central pillar of this transition is the indigenisation of electrical equipment, components, and materials required for power generation, transmission, and distribution — an area that has long remained heavily import-dependent despite the country’s latent industrial capacity.
To address this structural gap, a comprehensive Power Sector Indigenisation Plan (PSIP) has been under preparation for the past three years. Anchored in the National Electricity Policy 2021 and the National Electricity Plan 2023–2027, the PSIP envisages a ten-year, multi-pronged strategy to strengthen domestic manufacturing capabilities. It focuses on increasing the share of locally produced equipment and materials in total sector procurement, facilitating technology transfer, and promoting research and development across the power sector value chain. A key objective is the progressive localisation of manufacturing across generation, transmission, and distribution systems in line with Pakistan’s energy transition goals.
Under the Integrated Generation Capacity Expansion Plan (IGCEP) 2025–2035, the country aims to raise the share of renewable energy in total generation capacity to around 60 per cent by 2035. Achieving this target will require substantial scaling up of domestic capabilities in solar and wind technologies. However, recent trends highlight a widening gap between policy intent and implementation. Between 2017 and 2025, Pakistan’s cumulative imports of solar-related equipment are estimated to have exceeded $9 billion, including roughly $7.5 billion for solar panels and over $2 billion for inverters and balance-of-system components.
Furthermore, import data for FY2025 indicates a sharp surge, with machinery and equipment for solar, wind and battery storage collectively reaching $7.7 billion within the first ten months alone — highlighting the urgency of a coherent indigenisation policy.
Encouragingly, some progress has been made. A notable institutional development was the launch, in May 2025, of Pakistan’s first power equipment manufacturing dashboard. This real-time digital platform tracks local vendor capabilities, monitors localisation levels and identifies strategic investment opportunities under the PSIP framework, thereby improving transparency and coordination.
The National Grid Company of Pakistan (NGC), formerly the National Transmission and Despatch Company (NTDC), has initiated steps to build domestic capacity by placing ‘educational orders’ worth over Rs900 million with local manufacturers. These are intended to help domestic firms meet stringent grid specifications for high-voltage transmission components such as conductors and cables. In addition, contracts amounting to over Rs12 billion have been awarded to Pakistani cable manufacturers in recent years, indicating a gradual shift toward local sourcing, as the NGC is engaged in expanding and modernising the 220 kV and 500 kV transmission networks, supported by financing under the China-Pakistan Economic Corridor (CPEC) and multilateral institutions such as the Asian Development Bank (ADB).
At present, the level of indigenisation — measured as the share of locally manufactured equipment in total power sector procurement expenditure — is estimated at around 15 per cent. The PSIP aims to increase this share to approximately 30 per cent within three years by promoting the production of higher-value and critical components. Pakistan already possesses a modest but capable manufacturing base for medium- and high-voltage electrical equipment, including transformers, switchgear and control panels, many of which conform to international standards and are produced under technical collaboration with global firms.
The PSIP framework also seeks to support the domestic production of a broader range of equipment, including insulators, transmission towers, and energy meters, through a mix of standardisation, certification, fiscal incentives and technology upgrading. The overarching objective is to reduce import dependence while enhancing technological depth and export potential in electromechanical engineering.
Pakistan’s engineering sector — largely private-sector-driven — already manufactures a range of equipment, including transformers, generators, boilers, electric motors, towers and circuit breakers. With appropriate policy support and access to modern technology, the sector could realistically achieve 30–35 per cent indigenisation by value (share of total project cost), and a significantly higher proportion by weight or volume, across various types of power projects. Historically, local firms have supplied a variety of components and spare parts to the power sector, but their role has diminished as reliance on turnkey imports for large-scale projects has increased.
Regional experience shows the importance of sustained policy support. Countries such as China, India and Turkiye have successfully developed strong domestic power equipment industries through phased localisation policies, joint ventures and targeted incentives, while Malaysia, Indonesia and Vietnam are increasingly pursuing local manufacturing of renewable energy components as part of their energy diversification strategies. These examples highlight that indigenisation is a long-term process requiring consistency and policy discipline.
For the PSIP to deliver meaningful outcomes, Pakistan must create a genuinely enabling environment. This includes discouraging excessive reliance on turnkey imports, offering targeted fiscal incentives, and promoting joint ventures and structured technology transfer agreements. A phased indigenisation policy, linking local content requirements with project implementation, should be institutionalised. Collaboration with Western firms for advanced technologies and with Chinese partners for cost-effective solutions should be pursued pragmatically, with a clear focus on domestic capability-building. The missed opportunity in the late 1990s, when the global Vestas of Denmark considered establishing a manufacturing facility in Karachi but shifted to India due to a lack of policy support, remains a telling reminder of the costs of inaction.
Industrial self-reliance in the power sector is a strategic necessity. Without a robust domestic manufacturing base, Pakistan will remain exposed to external shocks, foreign exchange constraints and supply chain disruptions. By aligning its energy transition with a coherent, consistently implemented industrial policy, the country can advance affordability, energy security and sustainability. The real test, however, lies not in policy formulation but in its execution — requiring institutional coherence, long-term commitment, and an unwavering focus on developing indigenous technological capability and learning from past indigenisation efforts.
The writer is a retired chairman of the State Engineering Corporation.
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