Pakistan’s data centre industry eyes regional growth amid regulatory challenges

LAHORE: Pakistan’s data centre industry is growing rapidly, with strong potential to provide high-speed connectivity and data colocation services to Central Asian countries, supporting their digital transformation and economic progress.

However, the sector faces significant challenges, particularly from direct competition by government institutions, which could undermine private-sector investment and growth.Business Unit Head, Data Centres at DWP Group Muneeb Khawaja told a group of journalists on Monday that Pakistan’s cloud industry is evolving fast, with major telecom providers expanding their presence in the sector.

“The country’s burgeoning data centre industry can offer high-speed connectivity and data colocation services to Central Asian countries, boosting their digital advancement,” he said, adding that a key challenge is the government’s direct involvement, which risks delaying private-sector development and deterring potential investors.

“Government institutions receive certain relaxations in the bidding process, making it difficult for private players to compete, which could stifle investment in this high-growth sector,” Khawaja noted. He pointed out that a single data centre consumes 15-20 megawatts of power and brings nearly $100 million in investment, along with the creation of high-end technical jobs.

He emphasised that if the government supports data centre development through enabling policies rather than competition, it could create a win-win situation. “This sector has vast potential in Pakistan. Increased investment will lead to job creation and broader economic uplift.”

Khawaja highlighted that the government’s focus on digital transformation and emerging public-private partnerships provides a valuable pathway to address current challenges through regulatory support and investment in sustainable infrastructure.

He also stressed that while early initiatives and international collaborations are encouraging, a nationwide push toward green data centres will require robust policy backing, infrastructure upgrades, and technology transfer.

“For optimal efficiency, data centres should ideally be located in northern Pakistan, where the cooler climate reduces cooling costs,” he suggested. He added that regions like Gilgit-Baltistan (GB) offer ideal conditions, but site selection must also factor in risks such as floods and earthquakes, historical stability, internet connectivity, energy availability and skilled labour.

Globally, digitalisation has driven surging demand for data centres. “Every digital action generates data that must be stored securely -- and data centres remain the most reliable solution.”

Khawaja said DWP recently established two data centres in collaboration with the Higher Education Commission (HEC): one at NED University in Karachi and another in Lahore. “These centres meet the HEC’s data storage needs and support research and development at academic institutions. Since such projects require substantial investment, the HEC took the lead. Both facilities are scalable to meet the sector’s needs for years to come.”

He noted that many existing data centres in Pakistan still rely on traditional power sources and outdated cooling systems. “While some newer projects aim to incorporate renewable energy, many legacy centres lag behind in green transformation.”

Data centres generate significant heat and consume large amounts of energy to maintain optimal temperatures -- making energy the largest operational cost.“Our newly designed data centres focus on energy efficiency. Solar energy is a viable option, and regions like Sindh and Balochistan, with their strong wind corridors, offer promising opportunities for wind power integration,” Khawaja said. He added that Pakistan’s renewable energy potential exceeds 60,000MW. “Using on-site solar panels and long-term power purchase agreements (PPAs) with wind farms can significantly lower operational costs and reduce carbon emissions.”

In addition to technical support, Khawaja highlighted the company’s efforts to develop skilled manpower. “Skilled professionals are essential for running data centres successfully. We collaborate with academic institutions to train future data centre specialists. One such initiative is our partnership with Knowledge Stream, which provides youth training in this field,” he said.