• In Dec’25, power generation rose by a strong 8.8% YoY to 8,487 GWh, compared to 7,800 GWh in Dec’24. For 1HFY26, total generation reached 67,356 GWh, up 1.1% YoY.
• On a MoM basis, power generation improved 5.4%, reflecting seasonal effects.
• Power generation exceeded the NEPRA reference by 6.55% (7,965 GWh), driven by lower tariffs and the movement of captive consumers to the grid following the levy’s imposition, resulting in higher industrial generation and improved economic activity (LSM up 10.4% YoY in Nov’25).
• Power generation during the month was notably strong, recording the second-highest December output on record and the highest level since Dec’21. Generation exceeding the reference level also bodes well for future QTAs.
• Adjusted fuel cost in Dec’25 stood at PKR 9.62/KWh, higher than the reference cost of PKR 9.14/KWh.
• Consequently, DISCOs have sought a positive FCA of PKR 0.48/kWh after three consecutive negative FCAs, reflecting a higher thermal generation mix relative to NEPRA’s reference, despite lower fuel prices.
• RLNG, Imported coal, and Thar coal generation exceeded NEPRA’s reference, driving a positive FCA, while Nuclear and Hydel generation underperformed relative to forecasts.
• Hydel generation fell 13.7% YoY to 1,534 GWh in Dec’25, likely reflecting weaker hydel flows, and remained 0.5% below the reference level.

Dec’25: Cost of power generation up 1% YoY

• RLNG-based generation declined 9.3% YoY to 1,464 GWh in Dec’25, but remained 25.2% above the reference target for the month, exerting upward pressure on fuel costs.
• Imported coal generation surged 593.5% YoY to 860 GWh in Dec’25, likely driven by higher power demand and lower hydel output. It also exceeded NEPRA’s reference by 103.8%, contributing to a positive FCA for the month.
• Imported coal-based generation costs declined to PKR 14.31/kWh, down 25.3% YoY, driven by lower coal prices. Thar coal generation was priced at PKR 1.18/kWh, a discount to imported coal. Historically, Imported coal based power has carried a ~PKR 4/kWh premium over Thar coal.
• Power generation in Dec’25 exceeded the 7,965 GWh reference by 6.6%, yielding a surplus of 522 GWh. This is highly encouraging for grid stability and QTA’s outlook, which had been affected in previous months by increased solar adoption and the resulting stagnant or declining growth in demand.
• Power generation in Jan’26 is expected to rise MoM. Hydel output may continue to outperform earlier expectations of weaker water flows, supporting lower fuel costs and, in turn, negative FCAs. Looking ahead, NEPRA projects power demand to grow by 1.0% YoY in CY26.

Courtesy – AHL Research