Pakistan power output rises to two-year high in December
Industrial demand and grid migration push generation up 8.8%
Haris Zamir
Business Editor
Experience of almost 33 years where started the journey of financial journalism from Business Recorder in 1992. From 2006 onwards attached with Television Media worked at Sun Tv, Dawn Tv, Geo Tv and Dunya Tv. During the period also worked as a stringer for Bloomberg for seven years and Dow Jones for five years. Also wrote articles for several highly acclaimed periodicals like the Newsline, Pakistan Gulf Economist and Money Matters (The News publications)
Pakistan’s power generation rose sharply in December, climbing 8.8% year over year to 8,487 gigawatt-hours (GWh) compared with 7,800 GWh a year earlier, driven by stronger industrial demand, lower tariffs and a shift of captive power users to the national grid, according to industry data.
On a month-on-month basis, generation increased 5.4%, reflecting seasonal effects.
December output marked the second-highest December generation on record and the highest level since December 2021.
For the first half of fiscal year 2026 (1HFY26), total power generation reached 67,356 GWh, up 1.1% year over year.
Generation in December exceeded the NEPRA reference level by 6.55%, or 522 GWh, surpassing the benchmark of 7,965 GWh.
Analysts attributed the stronger-than-expected output to reduced electricity tariffs and the migration of captive consumers to the grid following the imposition of a levy, which boosted industrial consumption.
Large-scale manufacturing (LSM) rose 10.4% year over year in November, signaling improved economic activity.
The higher-than-reference generation is seen as supportive for future Quarterly Tariff Adjustments (QTAs) and grid stability, which had been under pressure in recent months due to rising solar adoption and subdued demand growth.
Despite the stronger output, the adjusted fuel cost in December stood at PKR 9.62 per kilowatt-hour, above NEPRA’s reference cost of PKR 9.14 per kilowatt-hour. As a result, distribution companies (DISCOs) have sought a positive Fuel Cost Adjustment (FCA) of PKR 0.48 per kWh, following three consecutive negative FCAs. The request mainly reflects a higher thermal generation mix than forecast, despite lower global fuel prices.
Sources of power generation
Generation from RLNG, imported coal and Thar coal exceeded NEPRA’s reference levels, driving the positive FCA, while nuclear and hydel generation fell short of projections.
Hydel generation declined 13.7% year over year to 1,534 GWh in December, likely due to weaker water flows, and remained 0.5% below the reference level.
Overall, the cost of power generation rose 1% year over year in December.
RLNG-based generation fell 9.3% year over year to 1,464 GWh, but still came in 25.2% above the reference target for the month, adding upward pressure on fuel costs.
Imported coal-based generation surged 593.5% year over year to 860 GWh, driven by higher demand and lower hydel output. It exceeded NEPRA’s reference by 103.8%, contributing significantly to the positive FCA.
The cost of imported coal-based power declined to PKR 14.31 per kWh, down 25.3% year over year due to lower coal prices.
Thar coal-based generation was priced at a PKR 1.18 per kWh discount to imported coal. Historically, imported coal-based power has carried an average PKR 4 per kWh premium over Thar coal.
Looking ahead, power generation in January is expected to rise further on a month-on-month basis.
Hydel output may outperform earlier expectations of weaker water flows, potentially supporting lower fuel costs and a return to negative FCAs.
NEPRA projects national power demand to grow by 1.0% year over year in 2026.
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