Pakistan's Fuel Import Bill and the $1 Billion Question Around Range-Extended EVs

Petroleum swallows roughly 30 percent of Pakistan's total import bill. That single number sits at the heart of the country's entire energy-policy debate. A policy paper titled 'Future on Wheels', published by the Pakistan Institute of Development Economics (PIDE), now claims that if range-extended electric vehicles (REEVs) were widely adopted on the roads, Pakistan could save up to USD 1 billion a year. The figure hanging in the headline, however, is a modelled possibility—not a forecast. And that is exactly where the real conversation should begin. South Asia's energy geography has pulled at me for years. Working from India into Bangladesh, I have seen that almost every country in the region walks into the same trap—demand keeps rising, yet a large part of that demand must be met by leaning on outside markets. In Pakistan's case the dependence is sharper still. Foreign-exchange reserves swing up and down, and every time petrol or diesel prices rise, the shock lands directly on transport costs, food prices and the everyday budget of ordinary people. The 'Future on Wheels' paper was published in December 2026, and it presents the REEV as a transitional 'bridge technology'—one that can carry a country toward full electrification. So what exactly is a REEV? In plain terms, its wheels are turned by an electric motor. When the battery runs low, or during moments of heavy demand, a small fuel-powered generator inside the vehicle produces electricity to support that motor. It is therefore neither a fully battery-driven car nor a conventional petrol car—it sits in between. The argument of PIDE's researchers is that this in-between position is the realistic one for a country like Pakistan, because charging infrastructure here is still immature and the need to travel long distances is acute. Where does the saving figure come from? The core argument is that if a large share of vehicles runs on electricity, petroleum imports fall, and with them the pressure on foreign exchange and the volume of carbon emissions. But PIDE itself makes clear that the USD 1 billion calculation depends on several conditions: how far a vehicle travels (mileage), where the electricity comes from (charging source), and what share of total driving is genuinely done on electricity (the electric-operation share). This is my first objection. When a number drawn from a best-case scenario is placed in a headline, ordinary readers assume it is a guaranteed gain. In reality the calculation rests on the most favourable assumption, and that favourability depends on infrastructure that does not yet exist. And from here springs my second, larger doubt. As evidence for the savings, the report leans mainly on unnamed 'industry analysts' and 'industry insiders', alongside the PIDE paper itself. This mixed provenance is typical of reporting in which there is an interest in advancing a particular policy position. That is not a crime, but readers should stay alert. Seen from the outside, many people reduce this debate to two camps—'EVs good, petrol bad'. The real picture is far less simple. First, a REEV is not a fully emission-free vehicle; its internal generator burns fuel, so even if tailpipe emissions fall, it cannot be called truly zero-emission. Second, spreading electric vehicles creates a new kind of import demand—batteries, semiconductors, charging components. One type of import may fall, but another may rise. The real question is how much a country gains on a net basis. Third, if the electricity charging these vehicles comes from coal, the carbon-saving claim weakens considerably. There is another dimension I consider important—equity. Discussions of a USD 1 billion saving often assume that those who can afford a private car are the ones who will benefit. But for someone who earns by the day, a battery-powered car remains a distant dream. Yet Pakistan's transport system relies heavily on small traders, vans, buses and three-wheelers. If the policy is designed only with high-income consumers in mind, a large part of the dream of cutting fuel imports simply will not materialise. Having watched this region's economy and infrastructure for many years, I keep concluding that the pace of decisions is often slower than the logic behind them. A policy paper can show a USD 1 billion possibility, but turning that possibility into reality on the roads requires reliable electricity supply, long-term tax policy, local battery manufacturing and consumer confidence. None of these is built in a day. Among the researchers involved with PIDE—Dr Usman Qadir, Mohammad Shaaf Najib and Saddam Hussein—surely know that the journey from policy to reality is far more complex than any model. Looking at Pakistan's debate from Bangladesh, I feel something familiar. Just as talk of fuel-efficient vehicles grows on Dhaka's streets, so it does in Karachi and Lahore. The two countries' economic structures are not identical, but the trap is almost the same—import-dependent fuel, weak infrastructure and limited political patience. I have always viewed with suspicion the idea that a policy that works in one country will work identically in another. And it is precisely here that an important lesson hides. The conversation about energy transition usually begins in the language of technology, but ends in the language of economics and politics. REEV technology is nothing new; what is new is the strategy of applying it within an indebted, import-dependent economy like Pakistan's. Battery costs, the interest on loans, consumer confidence—unless these three are resolved, the model's numbers will remain on paper. So what is the verdict? The USD 1 billion figure is not illusory, but it points to a target, not proof of achievement. The REEV can be a sensible bridge for Pakistan—if the policy weighs electricity supply, battery manufacturing and the purchasing power of ordinary consumers together. In the coming years, when Pakistan settles its own energy accounts, the question will be simple: is turning toward electricity a number—or a habit? That habit can only be built by sustained investment, and its proof will be found on the roads, not in a policy paper.