Power generation rises around 9% YoY to 8,487 GWh
Pakistan’s power generation sector recorded a total output of 8,487 GWh in December 2025, marking an 8.8% YoY increase compared with 7,800 GWh in December 2024.
The month also recorded the second-highest December generation on record and the highest level since Dec 21, showed a positive trajectory for Quarterly Tariff Adjustments (QTAs) and overall grid stability.
On a month-on-month basis, output rose 5.4%, supported by seasonal factors and stronger industrial demand, according to data compiled by Arif Habib Limited.
Despite higher generation, adjusted fuel cost in Dec 25 stood at Rs9.62/kWh, above NEPRA’s reference of Rs9.14/kWh. Consequently, DISCOs have requested a positive Fuel Cost Adjustment (FCA) of Rs0.48/kWh, ending three consecutive months of negative FCAs.
The increase primarily shows a higher thermal generation mix versus the reference, even though underlying fuel prices were lower.
On the fuel mix side, RLNG, imported coal, and Thar coal generation exceeded NEPRA’s reference, driving the positive FCA, while nuclear and hydel output underperformed relative to forecasts.
Hydel generation fell 13.7% YoY to 1,534 GWh and remained 0.5% below the reference, showing weaker water flows.
RLNG-based generation declined 9.3% YoY to 1,464 GWh, but still remained 25.2% above the reference target, exerting upward pressure on fuel costs.
Imported coal generation surged 593.5% YoY to 860 GWh, supported by higher power demand and lower hydel output, exceeding NEPRA’s reference by 103.8% and emerging as a key contributor to the positive FCA.
In cost terms, imported coal generation fell to Rs14.31/kWh, down 25.3% YoY due to lower global coal prices, while Thar coal generation remained cheaper, priced at a Rs1.18/kWh discount to imported coal, narrowing the historical premium of ~Rs4/kWh.
Overall, Dec 25 generation exceeded the reference level by 6.6%, creating a surplus of 522 GWh, which is highly encouraging for grid stability and the outlook for QTAs.
This surplus marks a turnaround from previous months, when rising solar adoption and captive generation had constrained growth, pointing to a more balanced and resilient power sector trajectory going forward.
Looking ahead, power generation in Jan 26 is expected to rise on a month-on-month basis, supported by seasonal demand patterns and improving hydel output.
Stronger water flows may help lower fuel costs, potentially translating into negative FCAs in coming months.
NEPRA projects national power demand to grow by 1.0% YoY in CY26, indicating a gradual recovery in electricity consumption alongside improving economic activity, as reported by Arif Habib Limited.
