AHL Research has published a report on the performance of the Pakistan Power Sector. In August 2025, power generation decreased by 8% year-over-year (YoY) but showed a positive Fuel Charge Adjustment (FCA). Specifically, power generation for August 2025 reached 14,218 GWh, which was an 8% increase compared to 13,179 GWh in August 2024. Additionally, total power generation in the first two months of FY26 remained stable at 28,341 GWh, slightly higher than the 28,059 GWh recorded in the same period of FY25. Month-over-month (MoM), power generation also saw a 1% increase.
The rise in power generation during August can be attributed to several factors: 1) reduced power tariffs, 2) the migration of captive power consumers to the grid following a levy aimed at aligning their fuel costs with power tariffs, and 3) a low base in August 2024, which marked the lowest power generation for that month since 2017.
The adjusted fuel cost in August 2025 stood at PKR 7.51 per kWh, exceeding the reference cost of PKR 7.31 per kWh. As a result, Distribution Companies (DISCOs) are seeking a PKR 0.19 per kWh positive FCA. This is the first positive FCA since April 2025, driven by the shift to costlier fuels.
Hydel and nuclear output fell below the reference levels, while the output from Regasified Liquefied Natural Gas (RLNG) and imported coal increased significantly compared to NEPRA’s reference targets. RLNG-based generation rose by 4% YoY to 2,180 GWh in August 2025, and it remained 27% above the August 2025 reference target. Hydel-based generation increased by 3% YoY to 5,362 GWh, although it fell 6% short of the reference target for August. Imported coal-based generation saw a substantial increase of 67% YoY to 1,138 GWh, exceeding the August reference target by 101%.
**Outlook**
Power generation in August 2025 exceeded the reference level of 13,989 GWh by 2%, which is a positive development for the grid after several months of decline, despite lower tariffs and the shift of captive power consumers to the grid. A surplus of 229 GWh has accumulated, with actual generation recorded at 14,218 GWh, indicating a rise compared to the reference generation.
In September 2025, power generation is expected to decline due to seasonal factors, particularly lower temperatures. Hydel output may remain constrained this year due to reduced water flows. Looking ahead, NEPRA projects power demand to grow by 2.8% YoY in FY26. Given the lower generation from hydel sources, the reliance on more expensive fuel sources is expected to increase, leading to higher fuel costs and consequently, positive Fuel Price Adjustments (FFCAs).
