Islamabad, May 22, 2025: Pakistan’s power generation in April 2025 hit a four-year high at 10,513 GWh, marking a dramatic 22% year-on-year increase, according to the latest NEPRA data.
This surge in Pakistan’s power generation is driven by rising electricity demand, favorable fuel costs, and a notable shift back to the national grid as industries ditch costly captive units.
Power Generation Sees Highest Monthly Spike Since 2021
The April 2025 figures reflect not only a 22% YoY boost but also a strong 25% rise from March, marking the highest monthly electricity output in the last 48 months. “Power generation in April surged by 22% YoY, the highest in 4 years,” stated Arif Habib Limited (AHL).
Despite the sharp rise, output remained close to NEPRA’s reference level, yielding a positive Fuel Cost Adjustment (FCA)—the first since June 2024.
Maaz Azam of Optimus Capital noted, “This positive FCA reflects our transition to a pricier but necessary fuel mix.” This signals a shift in energy strategy aimed at balancing cost-efficiency with generation reliability.
Why the Surge? Weather, Tariffs, and Captive Plant Exodus
Industry experts link the jump in Pakistan’s electricity production to spiking temperatures and easing grid tariffs, which have made national supply more attractive than self-generated (captive) power. “With lower grid tariffs, industries found it cheaper to rely on the grid,” explained Sana Tawfiq of AHL.
Adding to the switch was a steep Rs791/mmbtu levy on gas used in captive power plants, pushing generation costs in those setups to around Rs42/kWh—almost 50% more than the grid average of Rs28/kWh.
Breakdown by Source: Hydel Leads, Local Coal Booms
From a supply perspective, hydropower took the lead with 2,306 GWh (22%), while RLNG contributed 2,157 GWh (21%) and nuclear 1,882 GWh (18%). Most striking was the 59% YoY increase in local coal-based generation, which climbed to 1,540 GWh due to better utilization and competitive fuel pricing.
In contrast, imported coal and natural gas saw major declines of 32% and 26%, respectively—driven by strategic cost containment. Wind and solar retained a stable 9.2% share, while RFO made a costly comeback with 83 GWh at Rs28.77/kWh.
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Cost Trends: Fuel Expenses Up, But Generation Cost Down
Though fuel cost per unit rose 8% YoY to Rs9.92/kWh due to greater use of RLNG and RFO, the overall generation cost surprisingly fell to Rs8.95/kWh—down 5% YoY and 8% MoM. This drop is credited to optimized fuel use and reduced dependence on imports.
Hydropower and nuclear energy remained the cheapest contributors at near-zero and Rs0.38/kWh, respectively. In contrast, RLNG’s share of the fuel cost soared to Rs4.98/kWh, surpassing its projected reference cost by over 50%.
Policy Impact: Fuel Mix Reshuffle Brings First FCA Relief in 10 Months
Despite missing NEPRA’s generation reference by just 0.4%, the switch in fuel types reshaped cost dynamics. Hydropower underperformed its reference by 28.6%, while coal-fired output jumped 48.6%, with imported coal alone spiking 115%. RLNG increased by 42.1%, while nuclear fell 22.3%.
These changes led to a net positive FCA of Rs1.27/kWh—an important relief for end-users after months of negative adjustments. “A notable milestone for both industry and consumers,” observed analysts at Optimus Capital.
