A 22 percent year-on-year jump in electricity generation in April 2025 has some in government circles celebrating — perhaps a bit too soon. The chest-thumping overlooks a simple fact: the surge comes after two straight years of steep declines — 14 and 22 percent, respectively. April 2025 output merely returns to April 2021 levels. Generation remains 19 percent — or 2.3 billion units — below the 2022 peak.
Cumulatively, electricity generation for 10MFY25 stands at 97 billion units — the lowest since FY20 and 12 percent shy of the FY22 high. Even the 12-month rolling average, now at 10.2 billion units, is hardly worth cheering. That mark was first hit over four years ago, in March 2021.
A dip in average tariffs across the board likely played a role in the April rebound — though it’s worth noting the month was also the second warmest on record. Still, any recovery must be seen in context: average household consumption per connection hit a 20-year low last year. The bigger factor may well be the gradual return of captive power users to the grid (see: Power generation rises – but at what cost, May 23, 2025).
It’s still too early for precise estimates, but policy signals appear to be working. By raising gas prices and slapping on levies, the government is making captive generation increasingly unviable. At current rates, continued off-grid operations by industrial users look unsustainable — the shift to grid electricity now seems a matter of when, not if. The core policy objective remains clear: redirect scarce natural gas toward more efficient use within the centralized power system.
It’s early days, but so far, the natural gas diverted from captive users hasn’t translated into higher gas-based power generation. At 842 million units, April 2025 marked the lowest gas-fired output for any April in the past decade. On a 12-month rolling basis, gas generation has dropped by more than half over eight years — from a monthly average of 2.2 billion units to under 1 billion units.
State-owned gas plants continue to operate at dismally low utilization levels. Two of the largest returned FY24 capacity factors of just 30 and 10 percent. While curbing captive power is sound policy in principle, success hinges on aligning it with available capacity and improved efficiency at gas-fired plants. Without that, the shift could backfire — costing more than it saves.
Meanwhile, hydropower brings its own set of challenges. April 2025 saw a 29 percent shortfall — about 1 billion units — from reference generation, driven by persistently low hydrology. Neelum-Jhelum remains offline, and a particularly dry season has worsened the outlook. With the looming threat of Indian water aggression, the hydel picture looks grim — piling further pressure on high-cost thermal generation.
RLNG-based generation in April 2025 exceeded the reference level by 42 percent — a trend that's held for months. The dilemma is now playing out in full: long-term state-to-state RLNG contracts have flooded the system, while non-power sector demand remains weak. This, despite Pakistan deferring several cargoes to next year.
The result? RLNG — the costliest fuel in the mix — contributed a fifth of total generation, pushing up the monthly fuel charges adjustment (FCA), even as global energy prices and the rupee stayed largely stable. For the first time this fiscal year, the FCA turned positive — and more increases may follow. Nepra has already flagged low hydrology as a risk factor, undermining the tariff reduction roadmap.
Looking ahead, industrial power demand is set to rise as captive generation is phased out. Yet early calculations for the FY26 base tariff revision don’t appear to factor this in — not in any of the seven scenarios under regulator review. Unless state-run gencos urgently improve efficiency, added demand could mean even more reliance on RLNG and imported coal — pushing fuel costs higher still.
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