Only in Pakistan: Citizens Pay Billions to Power Plants That Don’t Even Make Electricity

Pakistan’s power sector is producing less electricity while forcing consumers to pay for idle power plants, according to the Pakistan Electricity Review 2026.

The report shows electricity generation dropped 9 percent between FY22 and FY25, yet the share of capacity purchase payments jumped to 61 percent of total power purchase costs in FY25.

In simple terms, a growing portion of electricity bills is now going to paying power plants just to stay available, whether or not they generate power.

Total power purchase cost declined slightly by 4.4 percent to Rs. 2.9 trillion in FY25, mainly due to the retirement of some plants. But the cost structure worsened underneath.

The energy cost per unit fell to Rs. 9.04, while capacity cost surged to Rs. 14.21 per unit, nearly 40 percent higher than two years earlier.

Plant efficiency also remained weak.

Overall thermal capacity utilization stood at just 43 percent, meaning more than half of available thermal capacity sat idle or underused.

Imported coal plants ran at 23 percent, RLNG plants at 41 percent, and RFO-based plants at only 2 percent, despite continuing to impose fixed financial obligations on the system.

Fuel costs added another layer of pressure. Imported coal and RLNG together supplied only 24 percent of total electricity, but absorbed 42 percent of total generation cost. The overall weighted generation cost reached Rs. 23.25 per unit.

The report describes the system as structurally inverted: falling output, rising fixed charges, and shrinking efficiency, as solar growth reduces grid demand while expensive thermal capacity remains fully contracted.

Unless Pakistan restructures stranded capacity and redesigns the grid around flexible and lower-cost systems, consumers will continue paying rising tariffs for electricity that is increasingly not being produced in an efficient way, the report added.