India-Pakistan Conflict: Impact on Regional Stability and Energy Infrastructure

The escalating conflict between India and Pakistan in May 2025 presents significant concerns for regional stability and energy infrastructure. The conflict was triggered on April 22, 2025, when a terrorist attack in Pahalgam, located in Indian-administered Kashmir, resulted in the deaths of 26 civilians, predominantly Hindu tourists. The Resistance Front, a militant group linked to Pakistan-based Lashkar-e-Taiba, claimed responsibility for the attack, leading to a severe escalation in tensions between the two countries.

In response, India launched “Operation Sindoor” on May 6, targeting nine sites in Pakistan and Pakistan-administered Kashmir, claiming to strike terrorist infrastructure. Pakistan reported civilian casualties from India’s strikes and claimed to have downed several Indian aircraft, further intensifying the conflict.

From an energy perspective, the conflict poses significant risks to infrastructure in the affected regions. The conflict zones encompass areas with critical energy infrastructure, including hydroelectric projects in Kashmir. India’s ongoing hydroelectric projects, such as the Pakal Dul and Ratle dams, are now at heightened risk of becoming collateral damage in the conflict.

Additionally, the conflict has led India to suspend the Indus Waters Treaty, a key water-sharing agreement with Pakistan, raising concerns over water security that could potentially impact hydroelectric power generation in both countries. The suspension of the treaty underscores the fragility of shared water resources in the region and the potential for further escalation affecting energy projects.

The conflict has also cast a shadow over investment prospects in the region, as the geopolitical instability may deter foreign investment in renewable energy projects. This uncertainty could significantly impact progress towards sustainable energy goals in both India and Pakistan. The conflict underscores the importance of assessing security and political risks associated with ongoing or planned projects in the region.

For further insights contact our Head of Trading & Risk, Peter Leyland, at Peter.Leyland@gleg.co.uk.