Per Unit Cost in Pakistan Drops to Rs8.6

Staff Report

Pakistan’s average per unit electricity cost in Pakistan declined to Rs8.6/KWh in FY25, down 2% from Rs8.8/KWh in FY24. The drop in fuel costs and government measures aimed at transitioning captive users back to the national grid helped stabilize electricity generation and ease financial pressure on consumers.

Fuel Cost Decline Brings Relief

In June 2025, the fuel cost of electricity generation fell 9% year-on-year to Rs7.9/unit, though it rose 1% month-on-month. The decline was mainly due to lower global prices of imported coal and crude oil.

The average cost of electricity from imported coal dropped 28% year-on-year to Rs16.7/KWh, while RLNG-based generation cost declined 1%, tracking a 12% fall in global crude oil prices, which averaged US$70/barrel during FY25,” Topline, a research agency said in its report.

Shift in Weighted Average Cost

Hydropower led the generation mix with a 31.44% share, followed by RLNG at 17.48%, nuclear at 17.66%, and coal (local and imported combined) at 19.36%. Gas contributed 8.82%, wind 3.02%, and furnace oil only 0.41%.

The increased share of hydel and nuclear — both low-cost energy sources — contributed to the overall drop in per unit electricity cost in Pakistan. Notably, imported coal’s share in total generation rose sharply to 7.13% in FY25 from 3.40% a year earlier.

Infrastructure Additions Support Low-Cost Generation

Several projects enhanced Pakistan’s generation capacity during the year:

• SK Hydropower Station (221 MW commissioned, 884 MW total planned)
• Pehur Hydel Power Plant (18 MW)
• Marala Hydropower Plant (7.64 MW)
• Lakhra Power Plant (GENCO-IV) – a 150 MW coal-fired facility
• These additions supported a shift towards more sustainable and affordable power sources.
• Structural Reforms Push Captives to Grid

Total electricity generation in FY25 was 127,159 GWh, nearly flat year-on-year. However, the fourth quarter saw a 7% increase, recovering the 2% decline in the first nine months. This reversal followed the imposition of an off-grid levy in February 2025, which encouraged captive users to reconnect with the national grid.

Additionally, the government redirected savings from renegotiated IPP contracts and reallocated the petroleum development levy to offer tariff relief during the April–June quarter — directly benefiting end users.

Growth Ahead, Cost Trends Stable

Electricity consumption is projected to increase by 5–8% in FY26, supported by:

• Ongoing transition of captive generation to the grid
• Levy on furnace oil (FO) to discourage off-grid usage
• Gradual economic recovery and easing interest rates

These factors are expected to improve demand while maintaining stability in per unit electricity cost in Pakistan, potentially easing the burden on households and industrial consumers in the coming year.Consumers to Face Rs 1.27 Per Unit Increase In Electricity Bills