In May 2026, Pakistan’s power generation declined slightly year-on-year by 0.9% to 12,638 GWh. This is a slight decrease compared to 12,755 GWh produced in May 2025. However, for the first 11 months of fiscal year 2026 (11MFY26), total generation increased by 1.6% year-on-year to 115,268 GWh.

Month-on-month figures indicate a significant 33% rise in generation, attributed to seasonal factors. Despite this, power generation has remained below NEPRA’s reference levels, primarily due to government austerity measures aimed at curbing consumption, disruptions in RLNG supply, and increased reliance on distributed generation. This situation persists even with lower tariffs and a shift in industrial consumption towards the national grid, alongside packages aimed at boosting consumption for industrial and agricultural sectors.

The adjusted fuel cost in May 2026 rose to PKR 9.25 per KWh, surpassing the reference cost of PKR 8.43 per KWh. As a result, Distribution Companies (DISCOs) have requested a positive Fuel Cost Adjustment (FCA) of PKR 0.82 per KWh for the month, largely due to a decrease in hydel generation and an increased dependency on imported coal amid rising oil prices.

Notably, FO-based generation plummeted by 96% month-on-month to only 20 GWh in May due to increased hydel output and recovering RLNG generation, coupled with a rise in imported coal-based generation. RLNG-based generation declined by 31.1% year-on-year to 1,493 GWh; however, it rebounded nearly 4-fold month-on-month, thanks to the import of various RLNG cargoes.

Hydel generation also declined 13.2% year-on-year to 4,205 GWh, mainly due to lower water flows and a comparison with the previous year’s high output. In contrast, generation from imported coal doubled to 1,343 GWh, compensating for the reduced contributions from RLNG and nuclear sources.

Looking ahead, reports of a peace agreement between the US and Iran, along with potential resumption of LNG output by QatarEnergy, suggest that RLNG supply disruptions may ease. NEPRA forecasts modest year-on-year power demand growth of 1.0% for calendar year 2026, and declining oil prices may further favor future FCAs.

As the market navigates these challenges, the impacts of policy measures and changing supply dynamics will be closely monitored to ensure stability in Pakistan’s power sector. 

Courtesy – AHL Research