Editorial:
Pakistan’s recent surge in power generation—up 22 percent year-on-year in April 2024—initially seems like a sign of recovery. However, a deeper look reveals a troubling reliance on imported, high-cost fuels, undermining the sustainability of this growth.
The rise in power consumption stems from three key factors: lower electricity tariffs for April–June, a mass shift of captive power users to the grid due to skyrocketing gas prices, and abnormally high April temperatures that spiked cooling demand. While these factors boosted grid usage to 10,513 GWh—near reference levels—the generation mix fueling this rise tells a cautionary tale.
Imported coal and RLNG, both expensive inputs, saw massive spikes. RLNG-based power rose 10 percent year-on-year and surpassed the reference level by 42 percent. Imported coal generation soared from nearly zero to over 1,000 GWh, a 115 percent jump over the reference level. In contrast, nuclear and hydropower—cheaper and domestic sources—lagged well below targets, due to technical limitations and low water availability.
Consequently, the Fuel Cost Adjustment (FCA) in April 2025 turned positive for the first time in nine months, reaching Rs8.95 per unit—a clear signal of increased generation costs. This surge in FCA may undermine the benefit of tariff reductions, which include temporary subsidies like the Tariff Differential Subsidy and Quarterly Tariff Adjustments.
The power sector faces two uncomfortable truths: First, higher consumption is not necessarily a win if it relies on costly imports. Second, the continued strain on domestic energy sources, particularly hydel and nuclear, will keep generation costs high.
Without urgent reforms to rebalance the energy mix and improve efficiency in domestic generation, the current trajectory risks entrenching Pakistan’s circular debt crisis further, despite superficial signs of progress.
