Even by Pakistan’s statistical standards, a 121 percent growth in the electricity sector in one quarter stands out as a spark too bright to be true.
The revised GDP estimates released by the Pakistan Bureau of Statistics (PBS) have thrown up a head-scratcher — the electricity, gas, and water supply sector, we are told, grew by a mind-boggling 121.4 percent year-on-year in 4QFY25. For context, the same sector contracted by 2, 5, and 4 percent in the first three quarters of the fiscal year. What could possibly have changed so dramatically in three months?
Officially, the explanation cites “higher subsidies, a decline in deflator, and a low base effect of -31.6%.” But even after accounting for all three, the numbers stretch credulity.
Start with the basics. Pakistan’s electricity generation — publicly available from Nepra — was up only 6 percent in the quarter compared to the same period last year. Neither hydel output nor thermal generation showed anything close to a doubling. If physical production was largely flat, what explains a 121 percent real growth in value-added output?
Some have attempted to attribute this sudden leap to the rise in rooftop or behind-the-meter solar generation, arguing that more households and businesses are producing their own power. But that explanation doesn’t hold up either. PBS’s electricity sector coverage explicitly includes only grid-supplied generation — from Wapda, IPPs, KE, and Gencos — not unmetered rooftop or captive solar setups. The latter are captured (if at all) within the manufacturing or household consumption framework, not in electricity sector value-added. In short, the solar boom may be real, but it’s statistically invisible here.
The answer may lie not in transformers or turbines, but in spreadsheets.
PBS’s methodology document for quarterly national accounts makes an important point: for the electricity sector, output and intermediate consumption data are compiled directly from institutional sources, without relying on external indicators. Moreover, the document notes significant variation in input structures — hydel being cheap, thermal being fuel-intensive, nuclear and renewables adding further complexity. In theory, higher subsidies could reduce recorded intermediate costs, thereby boosting “value added.” But that alone cannot multiply growth.
One important contextual factor here is the Rs1.71 per unit subsidy announced by the government during 4QFY25 to shield consumers from rising tariffs. That subsidy, while fiscally costly, effectively increased the sector’s “value added” on paper — since national accounts treat it as lowering the producer’s intermediate costs. Ironically, the state footing part of the power bill ends up adding to GDP — a statistical quirk where fiscal transfers inflate measured output without any real increase in generation.
A more technical clue hides in a quiet footnote of the GDP release:
“Quarterly values for years prior to FY2024-25 have witnessed changes as compared to previous release due to application of benchmarking through the Denton method.”
This seemingly innocuous line carries weight. The Denton technique is a statistical smoothing and benchmarking method used to align quarterly data with annual totals. Essentially, it redistributes growth across quarters so that the sum of quarterly estimates equals the officially benchmarked annual figure — while minimizing distortions in the quarter-to-quarter pattern.
In plain language, if the annual GDP number for electricity was revised sharply upward, the Denton adjustment would “force-fit” the quarterly figures to make them add up. Since Q1–Q3 were negative, the burden of adjustment would fall heavily on Q4 — inflating it beyond recognition.
That may well explain why the 4Q electricity sector appears to have rocketed 121 percent when, in operational reality, power generation barely moved. The number may not reflect any genuine surge in production or efficiency — merely a statistical backfill to reconcile quarterly and annual benchmarks.
The problem isn’t just technical. Such distortions, even if unintentional, can give policymakers and markets a misleading picture of economic momentum. If a single quarter’s exaggerated growth props up the annual GDP story, it dilutes confidence in the robustness of the data.Until PBS offers a transparent reconciliation of quarterly adjustments and the mechanics behind the Q4 spike, scepticism will linger. The 121 percent figure may belong more to the world of econometric modelling than the power grid.
Copyright Business Recorder, 2025
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