Pakistan Electricity Generation Cost Rises 14% Due to Higher Fuel Prices

Pakistan’s average fuel cost for electricity generation increased by 14% year-on-year in June 2026, reaching Rs. 9.0 per unit, mainly due to higher costs associated with RLNG and furnace oil-based power generation.

According to data compiled by Topline Research using NEPRA statistics, electricity generation declined 2% year-on-year in June to 13,430 GWh, although output improved by 6% compared with May 2026.

On an annual basis, Pakistan’s electricity generation reached 128,696 GWh in FY2025-26, showing only a 1% increase compared with the previous year. Analysts said the limited growth reflects weak electricity demand despite gradual economic recovery.

The country’s power generation mix witnessed significant changes during FY26. Electricity production from RLNG-based plants declined sharply, falling 33% year-on-year in June and 23% during FY26 to 17,130 GWh. RLNG’s share in the overall energy mix dropped to 13.3% from 17.5% a year earlier.

Meanwhile, imported coal emerged as one of the fastest-growing sources of electricity. Generation from imported coal increased 22% in June and surged 52% during FY26 to 13,748 GWh, raising its share in the national power mix from 7.1% to 10.7%.

Nuclear power generation also recorded growth, increasing 30% in June and 2% during FY26. Its contribution to Pakistan’s electricity mix rose to 17.7%, strengthening its role as a low-cost baseload energy source.

Hydropower remained the largest contributor to electricity generation, accounting for nearly 31% of total output in FY26. However, production declined slightly by 1% due to reduced water availability.

Renewable energy sources showed mixed performance. Wind power generation increased 17% during FY26, while solar generation declined 9%, despite continued growth in rooftop solar installations.

The use of furnace oil-based power generation increased significantly, rising 153% during FY26 from a low base, indicating continued reliance on expensive backup generation during periods of high demand.

Despite the increase in June fuel costs, the average annual fuel cost of electricity declined slightly by 1% to Rs. 8.4 per unit in FY26, compared with Rs. 8.6 per unit in FY25, supported by greater reliance on lower-cost sources including hydropower, nuclear energy, and imported coal.