• In Oct’25, power generation decreased by 3.7% YoY, reaching 9,886 GWh, compared to 10,262 GWh in Oct’24. During 4MFY26, generation totaled 50,819 GWh, stable from the previous year.
• However, on a MoM basis, power generation declined sequentially, falling 21.5%, reflecting seasonal effects.
• The decline in October’s power generation was driven by rising distributed generation.  However, this was despite lower tariffs and captive consumers shifting to the grid after a levy was imposed on captive.
• The impact of PPA terminations and renegotiations had already flowed through via QTAs, with NEPRA approving a negative QTA of PKR 1.89/kWh for 4QFY25, applied in August, September, and October 2025. QTAs are expected to normalize next month, which should result in slightly higher tariffs.
• Adjusted fuel cost in Oct’25 stood at PKR 8.72/KWh, lower than the reference cost of PKR 9.37/KWh.
• Consequently, DISCOs have requested a negative FCA of PKR 0.37/kWh, driven mainly by lower-than-expected oil prices and a smaller share of FO and imported coal in the generation mix compared to NEPRA’s reference assumptions. Lower imported coal prices further supported the negative adjustment. NEPRA had assumed Brent at USD 73/barrel, while actual prices averaged USD 64/barrel in Oct’25.

Oct’25: Cost of power generation down 6% YoY

• Imported coal–based generation cost fell to PKR 14.39/kWh, down 14.9% YoY, as coal prices declined. The cost gap with Thar coal narrowed to PKR 1.29/kWh, versus the historical ~PKR 4/kWh difference.
• Hydel and RLNG generation exceeded NEPRA’s reference, while nuclear, Thar coal, and imported coal generation fell short of forecasts.
• Hydel generation fell 15.1% YoY to 2,705 GWh in Oct’25 due to lower flows, though NEPRA had already factored this in. Output was 2.9% above the reference, resulting in no impact on fuel costs or the FCA.
• RLNG-based generation dipped 2.7% YoY to 1,949 GWh in Oct’25 but remained 6.6% above the Oct’25 reference target, raising fuel costs though partly offset by lower oil prices.
• Imported coal generation fell 48.4% YoY to 466 GWh in Oct’25 and also remained 30.4% below NEPRA’s reference, likely due to higher system constraints during the winter season.
• Power generation in Oct’25 was 8.7% below the 10,828 GWh reference, with a concerning surplus of 942 GWh despite lower tariffs and captive consumers switching to the grid.
• Power generation in Nov’25 is expected to decline due to seasonal factors, particularly lower temperatures. Hydel output may remain constrained this year amid reduced water flows, resulting in higher fuel cost and hence positive FCA’s. Looking ahead, NEPRA projects power demand to grow by 2.8% YoY in FY26.

Courtesy- AHL Research

AHL Research