Pakistan’s power sector started 2026 on a record note, generating 9,140 GWh in January, marking the highest monthly output ever recorded for the month and reflecting a 12.1 percent year-on-year increase from 8,153 GWh in January 2025. According to Arif Habib Limited, cumulative generation for the first seven months of the fiscal year reached 76,496 GWh, a modest 2.3 percent YoY increase, supported by seasonal factors, improved economic activity, and industrial incentives.
The growth in electricity generation coincided with a 4.8 percent rise in large-scale manufacturing during the first half of FY26, further driving grid-based demand. Industrial consumers have increasingly shifted to the national grid due to lower tariffs, incentivizing higher power uptake and supporting consistent generation growth.
Fuel-adjusted costs rose to Rs12.18 per kWh, prompting distribution companies (DISCOs) to request a positive fuel cost adjustment of Rs1.78 per kWh. This was largely attributed to lower contributions from nuclear, Thar coal, and natural gas in the generation mix, despite overall declines in fuel prices.
Hydropower output fell sharply by 17.7 percent YoY to 713 GWh due to lower water flows, reduced WAPDA generation, and non-utilization of the Sukki Kinari plant. Nuclear generation also declined by 26.3 percent YoY to 1,534 GWh, primarily because of reduced output from Chashma-III and KANUPP (K-3) reactors.
In contrast, RLNG-based generation surged by 29.8 percent YoY to 2,002 GWh, benefiting from higher industrial and commercial demand, reduced hydropower and nuclear supply, and the operational advantages of plant locations. Key RLNG plants, including QATPL, Haveli Bahadur Shah, and Balloki, delivered strong performance, underscoring the sector’s reliance on gas-fired generation to meet peak demand.
Imported coal generation also rose significantly, reaching 1,580 GWh, while furnace oil plants, which were idle in January 2025, returned to the grid, collectively producing 274 GWh. The cost of imported coal generation declined 5.8 percent YoY to Rs13.48 per kWh, while Thar coal maintained a Rs1.86 per kWh cost advantage, reinforcing its role as a low-cost generation source.
The robust January output contributes to greater grid stability and provides a foundation for future quarterly tariff adjustments, particularly as solar adoption grows and industrial demand strengthens. With industrial tariffs reduced by Rs4/kWh, the government’s incremental incentive packages, and higher levies on captive gas usage, grid-based consumption is expected to continue expanding.
Looking ahead, February 2026 may see a slight month-on-month decline in total generation, particularly from hydropower due to weaker water inflows. Nevertheless, NEPRA projects overall power demand to grow by 1 percent YoY for calendar year 2026, signaling steady, moderate growth in electricity consumption. The January performance highlights the critical role of RLNG and coal-fired plants in stabilizing the grid amid fluctuating hydropower and nuclear contributions, while supporting industrial expansion and economic activity.
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