Pakistan Power Demand up 5.1% in August, Driven by Incentives
Electricity consumption in Pakistan rose 5.1% year-on-year in August 2026 to 14,943 MW, supported by lower tariffs and industrial incentives.
Key points
- Power demand in Pakistan rose 5.1% year-on-year to 14,943 MW in August 2026, exceeding the seven-month average by 1.4%.
- Adjusted fuel costs hit Rs8.83/kWh in August, driving distribution companies to request a fuel cost adjustment of Rs1.73/kWh.
- Coal generation surged 53% to 3,956 GWh, while LNG-based output fell 51.7% due to import disruptions and geopolitical issues.
Pakistan’s electricity consumption recovered sharply in August 2026, rising 5.1% year-on-year to 14,943 megawatts (MW). According to The Express Tribune, this rebound was fueled by lower tariffs, targeted industrial incentives, and improving economic activity across key manufacturing sectors.
The August demand figure stood 1.4% above the seven-year average for the month, signaling a meaningful shift in grid utilization. However, consumption remains below the all-time peak of 16,176 MW recorded in August 2021, indicating there is still room for further growth in the power sector.
Incentives drive industrial consumption
Generation levels exceeded the reference scenarios projected by the National Electric Power Regulatory Authority (Nepra), a development that supports future quarterly tariff adjustments. The increase in demand is directly linked to the shift of industrial consumers toward the national grid and the implementation of incremental consumption packages for agricultural and industrial users.
Large-scale manufacturing output provided additional support, growing 3% year-on-year in July 2026. This uptick in industrial production correlates with the stronger electricity demand observed in August, reflecting a broader recovery in economic activity.
Fuel costs pressure distribution margins
Despite the demand recovery, distribution companies face persistent cost pressures. Adjusted fuel costs reached Rs8.83 per kilowatt-hour (kWh) in August, significantly higher than the reference cost of Rs7.10/kWh. This gap has prompted distribution companies to seek a positive fuel cost adjustment (FCA) of Rs1.73/kWh to maintain financial stability.
The cost increase is driven by a heavy reliance on expensive fuel sources, specifically re-gasified liquefied natural gas (RLNG) and furnace oil (FO). Furnace oil-based generation surged 49% month-on-month to 321 gigawatt-hours (GWh) in August, driven by disruptions in RLNG supplies and high summer demand. This shift benefits operators with hybrid take-or-pay contracts but raises overall system costs.
Hydel and coal offset import gaps
Lower-cost domestic sources partially offset the expensive imported fuels. Hydel generation rose 2.5% year-on-year to 5,654 GWh, running 17% above the long-term August average. Coal generation saw a more dramatic increase, surging 53% to 3,956 GWh, which marks its highest output for the month in recent years.
In contrast, LNG-based generation fell 51.7% year-on-year to 1,052 GWh due to geopolitical disruptions that reduced imports. Pakistan State Oil imported only one of seven scheduled long-term cargoes in August, pushing RLNG fuel costs to Rs45.93/kWh. Overall generation costs increased 37.6% year-on-year, with RLNG and FO accounting for 42% of the unadjusted fuel cost.
