Power sector starts 2026 strong with 12% YoY growth

February 19, 2026 (MLN): Pakistan’s power sector kicked off 2026 with a record-breaking performance, as it generated 9,140 GWh in January the highest output ever recorded for the month up 12.1% year-on-year (YoY) from 8,153 GWh in January 2025.

On a cumulative seven-month fiscal year basis (7MFY26), total generation reached 76,496 GWh,  a modest 2.3% YoY increase, according to a latest report by Arif Habib Limited.

Seasonal factors, improved economic activity, and industrial incentives supported the surge.

Large-scale manufacturing (LSM) rose 4.8% YoY in 1HFY26, while lower industrial tariffs and a shift of industrial consumers to the national grid further boosted demand.

Adjusted fuel costs increased to Rs12.18 per kWh. Consequently, DISCOs requested a positive fuel cost adjustment (FCA) of Rs1.78 per kWh, largely due to lower contributions from nuclear, Thar coal, and natural gas in the generation mix despite overall fuel price declines.

Hydropower output fell 17.7% YoY to 713 GWh, impacted by lower water flows, reduced WAPDA generation, and non-utilization of the Sukki Kinari plant.

Nuclear production also declined 26.3% YoY to 1,534 GWh, primarily due to lower output from Chashma-III and KANUPP (K-3) reactors.

In contrast, RLNG-based generation surged 29.8% YoY to 2,002 GWh, supported by higher demand, reduced hydel and nuclear supply, and plant location advantages.

Key RLNG plants including QATPL, Haveli Bahadur Shah, and Balloki recorded strong performance.

Imported coal generation posted an impressive rise to 1,580 GWh, while furnace oil plants returned to the grid after being idle in January 2025, collectively producing 274 GWh.

Generation costs for imported coal fell 5.8% YoY to Rs13.48 per kWh, while Thar coal remained cheaper by Rs1.86 per kWh, maintaining its historical cost advantage.

The robust January performance enhances grid stability and supports future QTA revisions, particularly amid rising solar adoption and previously stagnant demand.

With industrial tariffs lowered by Rs4/kWh, incremental incentive packages, and higher levies on captive gas usage, grid-based demand from industry is expected to strengthen.

Looking ahead, February 2026 may see a slight month-on-month decline in generation, particularly from hydropower due to weaker water flows while NEPRA projects overall power demand to grow by 1% YoY in calendar year 2026, signaling moderate but steady expansion in electricity consumption, as reported by the brokerage.

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