Pakistan’s power sector is generating less electricity while an increasing share of consumer payments is going toward idle generation capacity, according to the Pakistan Electricity Review 2026.

The report shows that electricity generation declined by 9% between FY22 and FY25, yet capacity purchase payments rose to 61% of total power purchase costs in FY25. This means a growing portion of electricity bills is being used to pay power plants simply to remain available, regardless of actual electricity generation.

Total power purchase cost fell slightly by 4.4% to Rs 2.9 trillion in FY25, mainly due to the retirement of some generation units. However, the underlying cost structure deteriorated.

The energy cost per unit dropped to Rs 9.04, while capacity cost rose to Rs 14.21 per unit, nearly 40% higher than two years earlier.

Plant utilization remained weak across the system. Overall thermal capacity utilization stood at just 43%, meaning more than half of installed thermal capacity remained idle or underused.

Breakdown by fuel shows further inefficiency: imported coal plants operated at 23%, RLNG plants at 41%, and RFO-based plants at only 2%, despite all continuing to incur fixed capacity charges.

Fuel economics added additional strain. Although imported coal and RLNG contributed only 24% of total electricity generation, they accounted for 42% of total generation cost. The overall weighted cost of electricity generation reached Rs 23.25 per unit.

The report describes the system as increasingly distorted—falling output, rising fixed capacity charges, and declining efficiency, as growing solar adoption reduces grid demand while expensive thermal capacity remains contracted and underutilized.