Pakistan power generation rises just 1.2% in FY26 as LNG shortages hit output

Pakistan's electricity generation rose a modest 1.2% in fiscal year 2025-26 to 128,699 gigawatt-hours (GWh), as disruptions to liquefied natural gas (LNG) supplies and weak electricity demand limited growth, according to industry data.

Annual electricity generation has remained broadly flat at around 128,000 GWh over the past four years after peaking at 145,094 GWh in FY22, reflecting stagnant demand despite lower electricity tariffs and improving economic activity.

In June alone, electricity generation fell 2.3% year-on-year to 13,431 GWh as LNG supply disruptions and weaker-than-expected demand offset higher generation from imported coal.

On a month-on-month basis, electricity generation increased 6.3% in June because of seasonal factors.

Analysts said power generation remained below the National Electric Power Regulatory Authority's (NEPRA) reference levels for another month, likely due to government austerity measures that curbed electricity consumption, increased load shedding caused by RLNG supply disruptions, and the continued expansion of distributed generation, including rooftop solar.

The weakness persisted despite lower electricity tariffs, industries shifting back to the national grid, incentive packages for industrial and agricultural consumers, and improving economic activity, with large-scale manufacturing expanding 5.8% year-on-year during the first 11 months of FY26.

Lower-than-reference electricity generation is expected to lead to higher quarterly tariff adjustments (QTAs) in the coming months, analysts said.

The average fuel cost of power generation rose to PKR 8.91 per kilowatt-hour in June, compared with NEPRA's reference cost of PKR 7.71 per unit. As a result, power distribution companies have requested a positive fuel cost adjustment (FCA) of PKR 1.20 per unit for June, citing lower contributions from hydropower and indigenous coal, greater reliance on furnace oil and high-speed diesel, and higher international oil prices.

The cost of electricity generation increased 14.2% from a year earlier in June.

RLNG-based electricity generation dropped 33.2% year-on-year to 1,480 GWh in June after Pakistan sharply reduced LNG imports because of geopolitical disruptions. Of the eight long-term LNG cargoes scheduled for the month, only three were imported by Pakistan State Oil under its long-term contract, along with one spot cargo procured by Pakistan LNG Ltd.

For the full fiscal year, RLNG-based generation declined 22.9% to 17,130 GWh, highlighting the impact of constrained LNG supplies on the country's energy mix.

Hydropower generation fell 3.1% year-on-year to 5,242 GWh in June because of lower water inflows and a high comparison base from the same month last year. However, hydropower generation for FY26 remained strong at 39,487 GWh.

Imported coal-fired generation rose 21.6% year-on-year to 1,699 GWh in June, supported by higher output from the Sahiwal Coal Power Plant, China Power Hub Generation Company and Lucky Electric Power Company. For FY26, imported coal generation surged 51.8% to 15,794 GWh, partially offsetting the decline in RLNG-based generation.

Meanwhile, furnace oil-fired generation jumped 400% from the previous month to 100 GWh in June as utilities relied on alternative fuels to meet higher summer demand amid RLNG shortages. The higher utilization also supported earnings for power producers operating under hybrid take-and-pay arrangements.

Analysts said power generation trends between December 2025 and March 2026 reflected improving grid stability following a PKR 4-per-unit reduction in industrial tariffs, targeted consumption incentives and higher levies on captive gas use. However, they warned that weaker electricity demand in the final quarter of FY26 could slow the recovery.

NEPRA projects electricity demand to grow 1% in calendar year 2026.