• In Feb’26, power generation rose by a strong 10.8% YoY to 7,696 GWh, compared to 6,945 GWh in Feb’25. For 8MFY26, total generation reached 84,192 GWh, reflecting a 3.0% YoY increase.
• On a MoM basis, power generation declined by 15.8%, reflecting seasonal effects.
• Power generation exceeded the NEPRA reference, in our view, aided by lower tariffs, a shift of industrial consumers to the national grid, an incremental consumption package for industrial and agricultural consumers, and improved economic activity (LSM up 5.8% YoY in 7MFY26).
• Power generation during the month was notably strong, recording the third-highest February output on record. Generation exceeding the reference level also bodes well for future QTAs.
• Adjusted fuel cost in Feb’26 stood at PKR 8.37/KWh, higher than the reference cost of PKR 6.73/KWh.
• Consequently, DISCOs have sought a positive FCA of PKR 1.64/kWh, primarily reflecting lower hydel and nuclear mix, while higher imported coal mix, despite lower fuel prices.
• Hydel generation declined 5.3% YoY to 1,783 GWh in Feb’26, likely due to weaker water flows.
• Nuclear generation declined 21.5% YoY to 1,449 GWh in Feb’26, likely due to ATAs at Chashma-III and KANUPP (K-3), consistent with the previous month.

Feb’26: Cost of power generation up 7.7% YoY

• RLNG-based generation rose by 25.6% YoY to 729 GWh in Feb’26, likely due to ATA among the major RLNG plants like QATPL, Haveli Bahadur Shah, and Balloki. Per NEPRA FCA document (Jan’26), Haveli Bahadur Shah remained under full/partial forced outages during the last month.
• Imported coal generation surged 10.7x YoY to 1,150 GWh in Feb’26, primarily due to a lower share of hydel, nuclear, and RLNG in the generation mix, with overall power demand otherwise improving.
• Thar coal, natural gas, and wind generation increased by 18%, 24%, and 44% YoY to 1,231 GWh, 887 GWh, and 251 GWh, respectively, due to similar reasons as imported coal, while FO-based plants saw no utilisation after briefly resuming in Jan’26.
• Imported coal-based generation costs declined to PKR 13.56/kWh, down 28% YoY, driven by lower coal prices. Thar coal generation was priced at a PKR 1.34/kWh discount to imported coal. Historically, Imported coal based power has carried a ~PKR 4/kWh premium over Thar coal.
• Power generation in Dec’25, Jan’26 and Feb’26 is encouraging for grid stability and the QTA outlook, which had previously been pressured by rising solar adoption and stagnant demand growth. With industrial tariffs reduced by PKR 4/kWh, incremental incentive packages, and a higher levy on captive gas usage, grid-based power demand, particularly from industry, is likely to strengthen going forward.
• However, the key variable remains the impact of the US–Iran conflict on overall power demand, as potential RLNG disruptions could lead to higher FCAs and tariffs, curbing demand, while weaker economic activity may further suppress consumption. Looking ahead, NEPRA projects power demand to grow by 1.0% YoY in CY26.

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