Power demand rebounds 5.1%, driven by incentives
Nepra agreed that the key principle should be equal treatment: open-access consumers should pay the same UoSC as similarly placed consumers of suppliers of last resort
Pakistan's power demand showed a strong recovery in August 2026, rising 5.1% year-on-year to 14,943 megawatts (MW), as lower tariffs, industrial incentives and improving economic activity supported electricity consumption.
August demand was 1.4% higher than the seven-year average for the month, although it remained below the peak of 16,176 MW recorded in August 2021, according to an analysis of the power sector by AHL.
"Power demand showed a meaningful recovery in Aug'26, rising 5.1% YoY to 14,943 MW, and standing 1.4% above the seven-year Aug average," noted the report. "While still below the 16,176MW peak recorded in Aug'21, the rebound is encouraging for power-sector activity and broader economic growth."
Power generation also exceeded the level envisaged under the National Electric Power Regulatory Authority (Nepra) reference, a development that could support future quarterly tariff adjustments (QTAs). The increase was attributed to lower tariffs, the shift of industrial consumers towards the national grid, incremental consumption packages for industrial and agricultural users and improving economic activity.
Large-scale manufacturing (LSM) output increased 3% year-on-year in July 2026, providing further support to electricity demand. However, the recovery has been accompanied by persistent fuel-cost pressures. Adjusted fuel cost stood at Rs8.83 per kilowatt-hour (kWh) in August, against a reference cost of Rs7.10/kWh, prompting distribution companies (DISCOs) to seek a positive fuel cost adjustment (FCA) of Rs1.73/kWh.
The higher FCA was primarily driven by increased reliance on re-gasified liquefied natural gas (RLNG) and furnace oil (FO), while elevated international oil prices added to generation costs. FO-based generation jumped 49% month-on-month to 321 gigawatt-hours (GWh) in August following disruptions to RLNG supplies and stronger summer demand. The higher utilisation is expected to support earnings of companies operating under hybrid take-or-pay arrangements.
Meanwhile, LNG-based generation fell 51.7% year-on-year to 1,052 GWh amid a sharp reduction in LNG imports linked to geopolitical disruptions. Of seven long-term cargoes scheduled for August, Pakistan State Oil imported only one under its long-term contract at 13.37%.
The cargo cost was also pushed higher by international oil prices, lifting RLNG fuel cost to Rs45.93/kWh, the second-highest level on record. Overall generation cost increased 37.6% year-on-year. RLNG and FO together accounted for 42% of the unadjusted fuel cost, contributing Rs3.23/kWh and Rs0.97/kWh, respectively, out of the total Rs10.01/kWh.
Lower-cost sources partly offset the pressure. Hydel generation rose 2.5% year-on-year to 5,654 GWh, 17% above the long-term August average. Coal generation surged 53% to 3,956 GWh, its highest August output, as imported-coal generation more than doubled. Nepra currently projects power demand growth of 1% year-on-year for calendar year 2026.