National advancement relies on the precision of systemic efficiency, yet the Pakistan Electricity Review 2026 highlights a structural crisis where capacity purchase payments have reached 61% of total power purchase costs. Despite a 9 percent drop in electricity generation between FY22 and FY25, consumers are increasingly burdened by the cost of maintaining idle infrastructure.
The Escalation of Capacity Purchase Payments
The financial architecture of Pakistan’s energy sector is currently witnessing a troubling divergence. While the total power purchase cost decreased slightly by 4.4 percent to Rs. 2.9 trillion in FY25, the underlying cost structure deteriorated. Consequently, the energy cost per unit fell to Rs. 9.04, but the capacity purchase payments surged to Rs. 14.21 per unit—a 40 percent increase in just two years.
- Total Power Purchase Cost: Rs. 2.9 trillion in FY25.
- Capacity Cost Increase: 40% higher than FY23 levels.
- Weighted Generation Cost: Reached a baseline of Rs. 23.25 per unit.
Systemic Inefficiency and Thermal Underutilization
In contrast to global efficiency standards, Pakistan’s thermal capacity utilization stood at a mere 43 percent during the last fiscal year. Furthermore, specific fuel-based plants showed even lower engagement levels. Imported coal plants operated at 23 percent capacity, while Residual Fuel Oil (RFO) plants sat almost entirely idle at 2 percent. Despite this minimal output, these plants continue to impose fixed financial obligations on the national grid.
Moreover, the reliance on imported fuel continues to strain the system. Imported coal and RLNG supplied only 24 percent of the total electricity but absorbed a disproportionate 42 percent of the total generation cost. This imbalance illustrates a calibrated failure in fuel-mix strategy.
The Situation Room Analysis
The Translation
To put this in perspective, your electricity bill is divided into two main parts: the energy you use and the cost of keeping the power plant ready to work. The “structural inversion” mentioned in the report means we are paying more for the existence of the plants than for the electricity they actually provide. As more citizens switch to private solar solutions, the grid demand shrinks, but the fixed contracts with large thermal plants remain, forcing the remaining grid users to pay higher shares of these fixed costs.
The Socio-Economic Impact
This crisis directly impacts the monthly disposable income of Pakistani households. When capacity purchase payments dominate the tariff, it creates a “poverty trap” where even energy conservation does not lead to significantly lower bills. For the industrial sector, these rising fixed charges act as a catalyst for reduced competitiveness, potentially leading to job losses and slowed economic growth in both urban and rural centers.
The Forward Path
This development represents a Stabilization Move that is failing to address the core issue. True Momentum Shift will only occur if the state initiates a strategic restructuring of stranded capacity. We must redesign the grid around flexibility and decentralized, lower-cost systems. Unless we pivot away from rigid, expensive thermal contracts, the Pakistani consumer will continue to subsidize a system that prioritizes availability over affordable delivery.
