KARACHI/ISLAMABAD: Power generation rose 7.1 per cent year-on-year (YoY) to 15,122 megawatts (MW) in July 2026, 2.3 per cent above the seven-year average for the month, according to sector data.
The rebound, although still below the 15,678MW peak recorded in July 2021, points to improving activity in the power sector and the broader economy.Power generation exceeded the National Electric Power Regulatory Authority’s (Nepra) reference level during the month, supported by lower electricity tariffs, a shift of industrial consumers to the national grid, incremental consumption packages for industrial and agricultural consumers, and improved economic activity. Large-scale manufacturing (LSM) grew 5.8 per cent YoY in the first 11 months of FY26.
The higher-than-reference generation level is also considered positive for future quarterly tariff adjustments (QTAs).However, the cost of power generation rose sharply. The adjusted fuel cost stood at Rs9.61 per kilowatt-hour (kWh) in July, compared with the reference cost of Rs7.09/kWh. Consequently, distribution companies (Discos) sought a positive fuel cost adjustment (FCA) of Rs2.52/kWh for July — the highest since June 2024.
The increase was primarily driven by greater reliance on re-gasified liquefied natural gas (RLNG) and furnace oil (FO), including spot RLNG cargoes, while higher international oil prices also added to generation costs.
FO-based generation surged 115 per cent month-on-month (MoM) to 200 gigawatt-hours (GWh) in July amid RLNG supply disruptions and higher summer demand. The increased utilisation is expected to benefit NPL, NCPL and NEL, particularly companies operating under hybrid take-or-pay arrangements.
Meanwhile, LNG-based power generation declined 33.2 per cent YoY to 1,629GWh in July, reflecting a sharp reduction in LNG imports amid geopolitical disruptions. None of the seven long-term cargoes originally scheduled for the month was imported by Pakistan State Oil (PSO) under its long-term contract.Pakistan LNG Limited (PLL), however, imported five spot cargoes at a 20.1 per cent DES slope. This pushed the RLNG fuel cost to Rs47.38/kWh, the highest on record, contributing to the higher FCA.
Unadjusted fuel costs also increased substantially, with RLNG and FO together accounting for 54 per cent of the total. RLNG contributed Rs5.10/kWh and FO Rs0.71/kWh out of the total unadjusted fuel cost of Rs10.75/kWh.
On the positive side, hydel generation reached a record 6,019GWh in July, increasing 6.0 per cent YoY and standing 32 per cent above the long-term July average of 4,560GWh. It was the highest hydel output recorded for any July, supported by improved water availability.
Coal-based generation also rose sharply to 3,819GWh, up 44 per cent YoY and the highest July output on record. Imported-coal generation increased 90 per cent YoY to 2,169GWh, while local-coal generation rose 10 per cent to 1,650GWh.
Imported coal alone accounted for around 57 per cent of total coal generation in July. Higher coal generation, together with strong hydel output, helped offset more expensive thermal generation.
SPOT LNG PUSHES JULY POWER COST TO RS9.61 PER UNIT
Expensive spot liquefied natural gas (LNG) cargoes pushed Pakistan’s average fuel cost of electricity to Rs9.6112 per unit in July, against a reference price of Rs7.0929 per unit, according to a petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) with the National Electric Power Regulatory Authority (Nepra).
The proposed Rs2.52 per-unit fuel cost adjustment could impose an estimated Rs41 billion burden on electricity consumers, according to the petition. Nepra has scheduled a hearing on the proposed adjustment for August 27.
The cost of re-gasified liquefied natural gas (RLNG)-based generation rose to Rs47.38 per unit in July, up from about Rs35.5 per unit in June. The power system generated 1,629 gigawatt-hours (GWh) from RLNG, accounting for 10.78 per cent of total generation, at a total cost of Rs77.198 billion.
The increase coincided with the procurement of costly spot LNG cargoes. According to the data, a cargo delivered on July 27 was imported at $21.88 per million British thermal units (MMBtu), while cargoes delivered on July 21-22 and July 15-16 were priced at $20.6999 and $18.2345 per MMBtu, respectively.
By comparison, 990GWh generated from local gas cost Rs13.629 billion, or about Rs13.77 per unit.The CPPA-G petition shows that total electricity generation in July stood at 14,501GWh, with a total generation cost of Rs139.370 billion. The resulting average cost of Rs9.6112 per unit was Rs2.52 above the reference price.
Hydel generation reached 6,019GWh, accounting for about 40 per cent of total generation. Nuclear plants generated 1,527GWh at an average cost of about Rs3.03 per unit.Power plants generated 1,650GWh from local coal at about Rs10.4 per unit, compared with 2,169GWh from imported coal at Rs16.33 per unit. Furnace-oil generation cost about Rs50 per unit, while high-speed diesel generation cost around Rs54.5 per unit.Under the monthly fuel adjustment mechanism, the proposed Rs2.52 per-unit increase will be passed on to consumers if approved by Nepra.
