Forex Savings through Biogas Energy in Pakistan (Policy)

Pakistans economy is facing a significant energy crisis, primarily due to its reliance on imported fossil fuels to satisfy energy needs. Currently, approximately 30 percent of the country’s import payments pertain to the Petroleum Group (State Bank of Pakistan, 2024). This dependence not only depletes foreign exchange reserves but also heightens economic vulnerabilities. The current energy mix is heavily skewed, with thermal sources contributing around 46 percent to electricity generation, while renewable sources such as solar, wind, and biogas, account for a mere 4 percent (GoP, 2024). This imbalance underscores the urgent need to diversify Pakistan’s energy portfolio and reduce long-term reliance on expensive imports. In this context, it is essential to acknowledge the significant but underutilised potential of the biogas sector in Pakistan. Biogas, produced from organic waste such as agricultural residues and livestock manure, represents a sustainable and locally sourced energy option. By investing in this sector, Pakistan can decrease its dependence on imported petroleum products and enhance its foreign exchange reserves, provided that decisive actions are implemented now. Given the country’s elevated external debt and dwindling foreign exchange reserves, particularly following a recent foreign exchange crisis, it is critical to adopt strategies that conserve foreign exchange while addressing intertwined economic and energy challenges. This report aims to investigate the role of the State Bank of Pakistan (SBP) in fostering, prioritising, and supporting the adoption of biogas technology in collaboration with government ministries and departments. This aligns with the SBP’s Vision 2028, leveraging the country’s strengths and existing opportunities on the global stage. The transformative potential of biogas energy can be unlocked through incentivising investments in biogas infrastructure, facilitating policy reforms, and enhancing sector development via accessible financing and awareness campaigns. Coordinated policy actions undertaken today to develop an inclusive and sustainable biogas sector could be instrumental in mitigating the energy crisis and preserving the countrys foreign exchange in the long run.