Pakistan’s power generation increased 5.1% year over year to 14,943 MW in August 2026, but higher fuel prices pushed up the cost of electricity generation, according to an analysis by Arif Habib Limited (AHL).
Power generation during the month was 1.4% above the seven-year average for August but remained below the peak of 16,176 MW recorded in August 2021. The recovery in demand was attributed to lower electricity tariffs, increased industrial and agricultural consumption, a shift of industrial users toward the national grid and improved economic activity.
Large-scale manufacturing also recorded 3% year-over-year growth in July 2026, supporting the recovery in electricity demand.
Despite higher generation, fuel costs remained a major concern. Adjusted fuel cost reached Rs. 8.83 per kWh in August, compared with the NEPRA reference cost of Rs. 7.10 per kWh. The increase was mainly driven by higher RLNG and furnace oil prices.
Distribution companies (DISCOs) have sought a Fuel Cost Adjustment (FCA) of Rs. 1.73 per kWh for August, which could increase electricity costs for consumers.
Furnace oil-based power generation rose 49% month over month to 321 GWh in August as RLNG supplies faced disruptions and summer electricity demand increased. AHL expects NPL, NCPL and NEL to record higher utilization, supporting earnings for companies operating under the hybrid take-and-pay model.
Meanwhile, LNG-based electricity generation fell 51.7% year over year to 1,052 GWh. The decline followed a sharp reduction in LNG imports amid geopolitical disruptions. Of the seven long-term LNG cargoes scheduled for August, only one was imported by Pakistan State Oil (PSO) under its long-term contract.
Higher international oil prices also increased the cost of imported LNG, pushing the RLNG fuel cost to Rs. 45.93 per kWh, the second-highest level on record. The increase in fuel costs is expected to remain a key factor influencing Pakistan’s electricity tariffs and fuel cost adjustments.
