akistan’s oil import bill hit $16.86 billion in 2025-26, exceeding International Monetary Fund’s estimates by $1.58 billion as global prices surged. Nearly 80 percent of the country’s crude oil passes through the Strait of Hormuz — a chokepoint that has been repeatedly threatened. Under normal conditions, Pakistan holds only 10 days of crude reserves.

This is not just an economic vulnerability. It is a strategic liability. And it is entirely preventable.

The most persistent objection to bio-fuels — that they divert land from food crops — collapses in Pakistan’s context. Only about 30 percent of Pakistan’s land area is currently used for agriculture.

While policymakers debate LNG terminals and imported coal, a domestically producible alternative sits untapped: bio-diesel from non-edible oilseed crops grown on Pakistan’s vast arid and semi-arid lands. Pakistan’s energy discourse has long been consumed by circular debt, load shedding and the rising cost of imported fuel. It consistently overlooks the most structurally significant leak in the economic hull: near-total dependence on imported fossil fuels for transport and heavy industry. That bill has grown from $9.4 billion to nearly $17 billion in less than two decades.

The experiment

Pakistan State Oil, in collaboration with the Pakistan Agricultural Research Council, planted Jatropha curcas — a non-edible, drought-resistant shrub whose seeds contain 32-35 percent oil. The bio-diesel produced in PSO’s laboratories was blended at 10 percent with regular diesel (B-10) and tested under regular operating conditions. A dedicated field vehicle ran on this blend for over a year. A diesel generator completed approximately 300 operational hours on B-10. Engine performance was satisfactory throughout; emission testing confirmed reduced hydrocarbons, carbon monoxide, and particulate matter compared to standard petro-diesel.

These were not projections; but documented, verifiable outcomes.

Food vs fuel?

The most persistent objection to bio-fuels — that they divert land from food crops — collapses in Pakistan’s context. Only about 30 percent of Pakistan’s 80 million hectares area is currently used for agriculture. The plant requires neither fertile soils nor irrigation-grade water - field trials operated on sub-soil water at 800-1,300 parts per million salinity. For moderate blending ratios, the engines require no modification.

Indonesian precedent

In 2025, Indonesia’s B40 programme — a 40 percent palm oil bio-diesel blend — distributed 14.2 million kilolitres of bio-diesel, saving an estimated $7.7 billion in foreign exchange and cutting carbon emissions by 38.9 million tonnes. The government is now rolling out B50, projecting annual savings of up to $9.18 billion and the eventual elimination of diesel imports.

Indonesia’s bio-fuel programme has not escaped criticism; subsidy costs and palm oil sustainability are genuine concerns. In Pakistan’s case, Jatropha is non-edible, grows on land unsuitable for food crops and does not face the deforestation controversy that dogged palm oil. In fact, Pakistan imports nearly $2.8 billion annually in vegetable oils. Redirecting even a fraction of that expenditure toward domestic oilseed cultivation and processing can initiate a meaningful shift in the country’s trade balance.

Possibilities

5,000 acres under Jatropha cultivation can generate approximately 24 million kg of seeds per year, producing 7.2 million litres of bio-diesel annually — enough to employ 500 farmers directly and create downstream jobs across seed collection, oil extraction, refining and logistics.

On the ethanol side, Pakistan produces around two million tonnes of molasses annually as a sugar industry byproduct currently exported at roughly $35 per tonne. Converted to ethanol, the same volume could yield over 500 million litres of fuel-grade ethanol, sufficient to replace 50 million barrels of oil equivalent. Combined with a modest 10 percent ethanol-petrol blend and the phased conversion of furnace-oil power plants to indigenous Thar coal, Pakistan could, in principle, approach fuel self-sufficiency in a decade.

These figures are derived from actual production data, official PSO documentation and standard agricultural yield estimates validated against Pakistan’s soil types.

The arithmetic

Pakistan’s oil import bill reached $16.86 billion in 2025-26 and is projected to remain above $16 billion a year for the foreseeable future. Petroleum now accounts for more than 22 percent of the country’s imports. A one-billion-dollar reduction in that figure — achievable through a 10 percent biodiesel blend based on validated local production data — could fund itself several times over in foreign exchange savings, rural job creation and reduced climate liability.

The way forward

Three shifts — commercial, financial and regulatory — are reqyuired.

First, the B2B transport sector must be targeted directly. Major fleets — logistics companies, intercity bus networks and agricultural transport operators — consume diesel in massive, predictable volumes. Securing forward off-take contracts with these buyers will allows bio-diesel producers to guarantee revenue before the plant is built, eliminating retail overhead and giving investors a clear demand pipeline.

Second, carbon revenue must be integrated into project economics from the outset. Bio-diesel reduces lifecycle greenhouse gas emissions by up to 80 percent compared to petroleum diesel. Under international carbon market frameworks — Verra VCS or the Article 6.2 mechanisms Pakistan is now actively engaging with — every litre of bio-diesel sold generates verified carbon credits.

Third, the government must provide regulatory certainty. As long as petroleum diesel carries heavy excise duties while domestically produced bio-diesel has no formal tax exemption framework, the playing field remains artificially uneven. A long-term tax exemption policy for indigenously produced bio-fuels will cost the state far less than the foreign exchange it currently remits to oil markets.

The technology to decarbonise Pakistan’s transport sector and claw back billions in foreign exchange already exists — in Pakistani laboratories, on Pakistani soil, with Pakistani farmers ready to cultivate it. We do not need a technological miracle. We need financial modelling, carbon market integration and policy stability. The seeds are ready; the soil is waiting.

The writer, an environmental engineer and a financial analyst, is a former visiting scientist at the University of Cambridge.