Pakistan’s national electricity grid generated 4.6 percent more power in March 2025 than it did in the same month last year. Sounds like recovery—until you consider that March 2018 recorded more generation than March 2025. This marks the second consecutive month where generation has fallen behind levels seen seven years ago.
Zoom out further, and the picture darkens. Cumulative electricity generation for 9MFY25 stands at 87 billion units—the lowest in five years and 12 percent short of the FY22 peak. On a 12-month rolling average basis, generation is back to levels last seen in September 2019, when monthly average output first breached the 10 billion mark.
This stagnation comes despite a record-hot summer, a winter incentive package, and relatively subdued fuel charge adjustments. And while fuel costs have remained below reference levels for nine straight months, keeping the average FY25 FCA in the negative, the margin is now vanishingly thin—down to just 3 paisas per unit in March. The risk is mounting: FCA has been kept tame largely due to soft international commodity prices, not due to domestic efficiency.
That fragility shows in the generation mix. Hydel output in March 2025 was 1.3 billion units, nearly a billion less than the same month last year, and even lower than March 2016. With Neelum-Jhelum offline and below-normal hydrology, the system has leaned heavily on RLNG, the costliest of all major fuels. Nuclear has stepped up when it can, but RLNG consistently exceeding reference levels is adding pressure to the fuel bill.
On the demand side, the story is no less grim. Residential consumption per connection hit a 20-year low of just 123 units/month in FY24, while industrial usage is at its weakest ever, barely touching 5,000 units per connection. The demand slump is broad-based and persistent.
Much of it is structural. As tariffs climbed and transmission constraints went unresolved post-CPEC capacity buildout, industries began exiting the grid, shifting toward solar and self-generation. In LSM, a third of sub-sectors are still operating below FY16 baselines, and grid reliance has eroded accordingly.
Households, too, are retreating. The 100–300 unit slab, which covers most middle-income households, has seen the sharpest contraction as consumers cut down on usage—either through necessity or sheer exhaustion from years of tariff shocks. Rooftop solar adoption among higher-income households is filling the vacuum, and that trend shows no signs of slowing, especially with cheaper storage solutions on the horizon.
All this is happening while AT&C losses remain high, and load-shedding persists, not due to fuel shortages but commercial loss management. Even the recent dip in tariffs via QTA and FCA hasn’t revived demand meaningfully—and that’s telling.
Unless systemic inefficiencies are addressed and governance revamped, Pakistan’s grid risks becoming irrelevant to its future power needs. The blueprint for reform already exists. The question is: does anyone have the courage to implement it? Cost side reforms should not be pushed down the throat as a be-all and end-all solution.
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