Pakistan power costs surge 20% amid generation mix overhaul

November 19, 2025 (MLN): Pakistan's power generation sector recorded a total output of 9,886 GWh in October 2025, representing a 4% year-on-year decline, according to data compiled by Arif Habib Limited. The country's energy mix continues to shift dramatically, with nuclear power emerging as the dominant source while renewable energy sources show mixed performance.

Nuclear generation surged 52% year-on-year to reach 2,188 GWh in October, capturing 22.1% of the total generation mix compared to 14.1% in the same period last year. This represents the single largest contributor to Pakistan's power grid for the month, showing the country's strategic emphasis on base-load nuclear capacity.

For the fiscal year-to-date (4MFY26), nuclear power has generated 7,965 GWh, up 10% compared to 7,216 GWh in 4MFY25, now accounting for 15.7% of total generation.

Hydroelectric power, traditionally Pakistan's backbone energy source, generated 2,705 GWh in October 2025, down 15% from 3,187 GWh in October 2024. Hydel's share of the generation mix fell to 27.4% from 31.1% year-over-year, showing seasonal water availability constraints.

Despite the monthly decline, hydel remains the second-largest contributor to Pakistan's power mix. Year-to-date generation stands at 18,673 GWh, essentially flat compared to 18,728 GWh in the same period last year.

Re-gasified Liquefied Natural Gas (RLNG) plants experienced a significant 3% year-on-year decline in October, generating 1,949 GWh compared to 2,003 GWh last year. The RLNG share in the generation mix decreased to 19.7% from 19.5%.

Cumulatively for 4MFY26, RLNG generation reached 8,382 GWh, down 8% from 9,118 GWh in 4MFY25. This decline shows both economic dispatch considerations and the higher cost of imported LNG.

Local coal-fired plants generated 1,261 GWh in October, down 17% year-on-year, while imported coal plants produced 466 GWh, declining a steep 48%. Combined, coal's share in the generation mix stands at 17.5%, down from 23.0% in October 2024.

The shift away from coal shows Pakistan's evolving energy economics and environmental considerations, though imported coal plants bear the brunt of reduced utilization due to higher fuel costs.

Solar power generation declined 3% year-on-year to 96 GWh in October, maintaining a modest 1.0% share of total generation. Year-to-date solar output remains flat at 413 GWh.

Wind power showed resilience with 185 GWh generated in October, down 3% year-on-year, but maintained its 1.9% share. Cumulative wind generation for 4MFY26 reached 1,631 GWh, up 14% from 1,428 GWh last year.

Residual Fuel Oil (RFO) plants recorded extraordinary growth, surging 2,300% year-on-year to 48 GWh in October from just 2 GWh last year. While still representing only 0.5% of the mix, this dramatic increase signals operational adjustments in response to grid requirements.

Year-to-date RFO generation stands at 345 GWh, up 132% from 149 GWh. The increased utilization of RFO plants, despite their high fuel costs, suggests that system operators are prioritizing grid stability and meeting peak demand requirements over pure cost optimization.

Average fuel costs rose 20% month-on-month to Rs8.51/kWh in October from Rs7.09/kWh in September, showing the changing generation mix and imported fuel price pressures. This sharp increase emphasizes the challenges facing Pakistan's power sector as it balances supply reliability with cost management.

RFO remained the most expensive fuel source at Rs32.69/kWh, climbing 16% from September's Rs28.24/kWh. RLNG costs showed some relief, declining 7% to Rs21.06/kWh from Rs22.19/kWh in September, though it remains among the pricier options in the fuel mix.

Domestic fuel sources also experienced upward pressure. Local coal costs rose 17% to Rs13.10/kWh from Rs11.19/kWh, while gas declined modestly by 6% to Rs13.36/kWh from Rs14.25/kWh. Most notably, baggasse costs surged 84% to Rs10.74/kWh from Rs5.85/kWh, the sharpest increase among all fuel types, showing seasonal availability constraints and demand dynamics in the biomass fuel market.

The data reveals Pakistan's ongoing energy transition, with nuclear and hydel together accounting for nearly half of total generation (49.5%). The reduced reliance on expensive imported fuels like RLNG and imported coal, combined with stable nuclear output, suggests efforts to optimize the generation mix for cost efficiency.

However, the 4% year-on-year decline in total generation may show weak electricity demand amid economic headwinds, warranting close monitoring of the power sector's financial health and circular debt dynamics.

Copyright Mettis Link News