Rawalpindi lithium-ion battery plant awaits federal policy approval

Pakistan is preparing a $2.25 billion lithium-ion battery manufacturing project at Heavy Industries Taxila in Rawalpindi district, to be run by the military-owned Margalla Heavy Industries Limited (MHIL), with production possible six to eight months after the government approves a policy for the sector.

Hamad Ali Mansoor, chief executive of the Engineering Development Board (EDB), told Arab News that construction and equipment installation at the site are already complete and the plant is waiting only for that approval. ProPakistani reported that the project was signed in July with a Chinese manufacturer Mansoor described as one of China's leading firms, together with a local private investor.

The factory will make lithium-ion cells, starting at a capacity of 200 to 300 megawatts before building up to a planned annual capacity of more than 1,000 megawatts. MHIL's Taxila operation already manufactures defence equipment, drones, electric buses and two-wheelers, and battery energy storage systems.

Mansoor said the EDB projects that demand for battery energy storage could reach 100,000 megawatts by June 2030 if the economy grows by 5 percent or more. Growth below 3 percent would hold demand to roughly 80,000 megawatts. The estimate covers households, commercial buildings, industrial facilities and electric vehicles from two-wheelers to buses and trucks. Grid stabilisation alone would need 3,000 to 5,000 megawatts of storage.

Meeting that demand would require four to five gigafactories, each costing about $1 billion to $1.25 billion, according to the board's estimates.

The lithium battery manufacturing policy was submitted to the Ministry of Industries in March and is still awaiting approval. It envisages four plants: three in Punjab's Lahore, Faisalabad and Rawalpindi divisions and one in Karachi. Manufacturers would be required to export a set share of their output, though Mansoor declined to give the target before the policy is cleared. He said the framework follows international safety and performance standards.

The plan follows Prime Minister Shehbaz Sharif's approval of the Automotive and Auto Parts Manufacturing Policy 2026-2031, which is itself awaiting International Monetary Fund approval because of the tax incentives it proposes and their effect on government revenue.

Pakistan currently assembles about 3,000 to 4,000 megawatts of batteries and related components, including motors, controllers and chargers, but remains dependent on imports. Mansoor said the government wants those components made entirely in Pakistan by next year, with the planned plants supplying both electric vehicles and grid storage and creating export opportunities for locally made cells.