Pakistan's electricity generation continues to fall amid economic slowdown

Pakistan's economic downturn continues unabated which can easily be gauged from electricity generation numbers which fell both on a yearly and monthly basis in February.

Electricity generation in February totaled 6,945 gigawatt hours (Gwh) compared to the same month last year when it amounted to 7130 Gwh, showing a drop of 3%.

Meanwhile, it declined by 15% compared to 8,153 GwH generated in January, data released by the National Electric Power Regulatory Authority showed.

In the eight months ended Feb 28, electricity generation declined by 3% to 81,739 Gwh compared with 84,426 Gwh produced in the same period a year ago.

Generation of electricity from hydel and nuclear plants topped the chart where they delivered around 26,115 Gwh and 14,952 Gwh, respectively, in the eight months of the current fiscal year recording a drop of 3% and rise of 2%, respectively.

The share of hydel-based electricity in overall generation remained stagnant at 31.9% during the period while share of nuclear power plants rose to 18.3% from 17.4%, the data revealed.

Electricity generation declined mostly because of slower economic activities and higher electricity prices which have throttled the overall industrial output.

Overall, large manufacturing sector showed a contraction of 1.8% during July to December while on a monthly basis, industrial production shrank by almost 3.73% in December, according to data from the Pakistan Bureau of Statistics.

Another reason which can be attributed to slower electricity generation has been shift of industrial, commercial, and residential consumers towards solar electricity generation. Net metering has become really popular, which forced the government to change the tariff of buyback to PKR 10 per unit from PKR 27 per unit for new connections with the license limited to seven years.

The government's stance was that due to net metering or shift to solar power, the burden has been increased on grid consumers who have to pay nearly PKR 159 billion additional against capacity purchase payments, as consumers have been using less electricity from the grid.

On the other hand, the total cost of generating electricity in Pakistan decreased by a significant 30%, clocking in at PKR 7.57 per kilowatt-hours (KWh) in February compared to PKR 10.79 per KWh in January.

On a yearly basis, electricity costs went down by 13% compared with PKR 8.70 recorded in February 2024.