Electricity Generation Becomes More Expensive in August

In August 2026, Pakistan's electricity generation capacity grew by 5.1 percent compared to the previous year, reaching a total of 14,943 MW, according to an analysis by Arif Habib Limited (AHL). This increase was slightly above the seven-year average for August, although it fell short of the record 16,176 MW achieved in August 2021.

The surge in power generation was mainly due to lower tariffs, a shift of industrial users towards the national grid, increased consumption by industrial and agricultural sectors, and improved overall economic activity. Moreover, large-scale manufacturing expanded by 3.0 percent year over year in July 2026.

The National Electric Power Regulatory Authority (NEPRA) reference level was surpassed during the month, which may lead to future capacity utilization agreements. In August 2026, the adjusted fuel cost per kilowatt-hour (kWh) stood at Rs. 8.83, surpassing the reference cost of Rs. 7.10 per kWh. This increase was primarily due to higher prices of rocket-assisted liquid natural gas (RLNG) and furnace oil, which led to a positive fuel cost adjustment demanded by distribution companies.

DISCOs (Distribution Companies) have requested a fuel cost adjustment (FCA) of Rs. 1.73 per kWh for August.

Notably, RLNG-based generation saw a significant surge of 49 percent month over month to 321 GWh in August, driven by disruptions in RLNG supply and heightened summer demand. Conversely, LNG-based power generation experienced a sharp decline of 51.7 percent year over year, reaching 1,052 GWh in August. This decline was mainly attributed to a significant reduction in LNG imports, which were affected by geopolitical circumstances.

Only one of the seven long-term LNG cargo deliveries scheduled for August was imported by Pakistan State Oil (PSO) under its long-term contract, accounting for just 13.37 percent of the planned deliveries. The sharp drop in LNG imports, coupled with higher international oil prices, led to RLNG fuel costs reaching a peak level, reaching Rs. 45.93 per kWh, which is the second-highest on record.