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By Malik Shahzad Aslam :
Pakistan’s average fuel cost for electricity generation increased by 14% year-on-year in June 2026, driven by greater reliance on costly fuels such as re-gasified liquefied natural gas (RLNG) and furnace oil, according to the latest energy sector data.
Figures compiled by Topline Research, based on statistics from the National Electric Power Regulatory Authority (NEPRA), show that the average fuel cost reached Rs. 9.0 per unit in June, compared with the same month last year.
Although electricity generation rose 6% compared with May, total power production stood at 13,430 gigawatt-hours (GWh) in June, representing a 2% decline year-on-year. Analysts said subdued industrial activity and slower-than-expected growth in electricity demand continued to weigh on overall power consumption.
For the 2025–26 fiscal year, Pakistan generated 128,696 GWh of electricity, an increase of just 1% compared with the previous year. Energy analysts say the modest growth reflects continued efficiency measures, rising rooftop solar adoption and cautious electricity consumption by households and industries.
The country’s power generation mix also underwent notable changes during the year. Electricity produced from RLNG-fired power plants fell sharply, declining 33% in June and 23% over the full fiscal year to 17,130 GWh. As a result, RLNG’s share in the national electricity mix dropped from 17.5% to 13.3%.
Meanwhile, imported coal emerged as one of the fastest-growing fuel sources. Electricity generation from imported coal increased 22% in June and 52% during FY26, reaching 13,748 GWh and raising its contribution to the national energy mix from 7.1% to 10.7%.
Nuclear energy also strengthened its role in Pakistan’s electricity sector. Power generation from nuclear plants rose 30% year-on-year in June and 2% during FY26, increasing its share of total electricity generation to 17.7%. Nuclear plants continue to provide stable, low-cost baseload electricity throughout the year.
Hydropower remained Pakistan’s largest source of electricity, contributing nearly 31% of total generation during FY26. However, output declined slightly due to lower water availability, highlighting the sector’s dependence on seasonal rainfall and reservoir levels.
Renewable energy showed mixed performance. Wind power generation increased 17% during the fiscal year, while solar generation declined 9%, despite continued expansion in rooftop solar installations across residential, commercial and industrial sectors.
The report also showed a significant rise in the use of furnace oil-fired power plants, with generation increasing 153% during FY26 from a relatively low base. Analysts say the increase reflects the continued need for expensive backup generation during periods of peak electricity demand and constraints in other parts of the power system.
Despite the higher fuel costs recorded in June, the average annual fuel cost of electricity declined slightly to Rs. 8.4 per unit in FY26 from Rs. 8.6 per unit a year earlier. The improvement was supported by greater reliance on relatively lower-cost generation sources, including hydropower, nuclear energy and imported coal.
Energy experts say Pakistan’s long-term challenge remains balancing affordability, energy security and sustainability. Increasing investment in renewable energy, modernising the national grid and reducing dependence on imported fuels are expected to remain key priorities as the country seeks to stabilise electricity costs and meet growing demand.
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