Pakistan’s power generation stabilises after two-year decline

ISLAMABAD: Pakistan’s power generation remained largely stable in FY25, clocking in at 127,159 GWh, almost unchanged from the previous year.

According to a research report by Topline Securities released on Monday, the year showed two distinct trends: during the first nine months (July to March), power generation dropped by 2 per cent year-on-year to 90,147 GWh. However, the trend reversed in the final quarter (April to June), with a 7 per cent rise to 37,012 GWh.

This recovery in the last quarter helped offset the earlier decline, keeping overall generation steady.

The rebound in power generation during 4QFY25 was mainly driven by the shift of captive users to the national grid. This followed the government’s decision to impose an off-grid levy on captive generation from February 2025.

The government also introduced measures to reduce overall electricity costs during April–June 2025. Savings from renegotiated agreements with Independent Power Producers (IPPs) and adjustments in the Petroleum Development Levy (PDL) contributed to this decline.

In the first nine months, power generation fell as bulk consumers increasingly relied on their own captive setups, using fuel oil, gas, and other sources.

In terms of energy mix, hydropower remained the largest contributor to electricity generation, accounting for 31.44 per cent in FY25 compared to 31.38 per cent in FY24. RLNG followed at 17.48 per cent (down from 18.70 per cent), while locally sourced coal contributed 12.23 per cent, slightly lower than 12.51 per cent the previous year. Imported coal-based generation increased significantly, contributing 7.13 per cent in FY25, up 370 basis points from 3.40 per cent in FY24.

Nuclear power made up 17.66 per cent of the mix, gas 8.82 per cent, wind energy 3.02 per cent, and furnace oil a minimal 0.41 per cent.

Three new hydropower plants were added to the grid in FY25: SK Hydropower Station (initially commissioned at 221 MW, with a planned capacity of 884 MW), Pehur Hydel Power Plant (18 MW), and Marala Hydropower Plant (7.64 MW). Additionally, the 150 MW Lakhra coal-fired plant (GENCO-IV) was also commissioned.

The average fuel cost of power generation declined by 2 per cent year-on-year to Rs8.6 per kilowatt-hour (KWh) in FY25, down from Rs8.8/KWh in FY24.

In June 2025 alone, fuel cost dropped 9 per cent year-on-year to Rs7.9/unit, though it edged up 1 per cent compared to May.

Around 46 per cent of the country’s power in FY25 came from RLNG, coal, and gas, with an average fuel cost of Rs16.5/unit, highlighting the continued burden of imported energy.

Meanwhile, the cost of generation from imported coal fell 28 per cent year-on-year to Rs16.7/KWh, due to a 5 per cent drop in global coal prices. Similarly, RLNG-based generation saw a 1 per cent cost reduction, driven by a 12 per cent fall in international crude oil prices to US$70 per barrel during the year, the report added.

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