By SKM
August 18, 2026
ISLAMABAD: Expensive spot LNG cargoes have emerged as a major driver of Pakistan’s higher electricity generation cost, pushing the average fuel cost of electricity to Rs9.6112 per unit in July 2026, against a reference price of Rs7.0929 per unit, with the resulting Rs2.52 per-unit increase likely to be passed on to consumers through the monthly fuel adjustment mechanism.
The increase carries an estimated financial impact of around Rs41 billion on electricity consumers, according to the petition filed by the Central Power Purchasing Agency-Guarantee (CPPA-G) before the National Electric Power Regulatory Authority (NEPRA).
The regulator has scheduled a hearing on the petition for August 27 at 2 p.m.
The July data reveals a striking disparity in the cost of different generation sources. While nuclear, hydel and domestic fuel-based generation produced large quantities of relatively cheaper electricity, a relatively small share of generation from expensive imported fuels—particularly spot LNG—substantially increased the overall generation bill.
Spot LNG pushes generation cost to Rs47.38 per unit
The most significant pressure came from RLNG-based power generation.
During July, the power system generated 1,629 GWh of electricity from RLNG, representing 10.78 percent of total generation. The cost of this generation reached Rs77.198 billion, translating into an average generation cost of approximately Rs47.38 per unit.
This was a substantial increase from the roughly Rs35.5 per-unit cost of LNG-fired generation in June.
The surge coincided with the procurement of costly spot LNG cargoes. According to the data, the cargo delivered on July 27 was imported at $21.88 per MMBtu. Another cargo delivered on July 21–22 was priced at $20.6999 per MMBtu, while a cargo delivered on July 15–16 cost $18.2345 per MMBtu.
The three expensive cargoes have consequently had a direct impact on the cost of LNG-based electricity and, through the fuel adjustment mechanism, on the overall power tariff payable by consumers.
Rs77.2bn spent on only 10.78pc of generation
The impact of RLNG becomes clearer when the generation mix is examined.
Only 1,629 GWh, or 10.78 percent, of July’s total electricity generation came from RLNG, yet this generation alone cost Rs77.198 billion.
By comparison, the entire electricity generation bill for the month stood at Rs139.370 billion for 14,501 GWh of generation.
This means RLNG generation accounted for a disproportionately large portion of the monthly generation expenditure because of its high per-unit cost.
The average cost of all electricity generated during July was Rs9.6112 per unit, but RLNG electricity alone cost almost five times the cost of nuclear generation.
Local gas costs less than one-third of RLNG
The contrast between imported LNG and domestic gas is particularly significant.
The system generated 990 GWh of electricity from local gas in July, equivalent to 6.54 percent of total generation. This generation cost Rs13.629 billion, resulting in a per-unit cost of approximately Rs13.77.
Thus, electricity generated from imported RLNG at Rs47.38 per unit cost more than three times as much as electricity generated from local gas at Rs13.77 per unit.
The difference illustrates the tariff implications of relying on expensive imported fuel when cheaper domestic and other generation resources are available.
Hydel generation provides 40pc of electricity
Hydropower remained one of the biggest contributors to the national generation mix.
The system generated 6,019 GWh from hydel resources in July, accounting for approximately 40 percent of total electricity generation.
The substantial contribution from hydropower provided a relatively low-cost source of electricity and helped contain the average generation cost. However, the benefit of cheaper hydel generation was partly diluted by the cost of expensive thermal generation.
Nuclear power remains the cheapest major source
Nuclear power continued to demonstrate one of the lowest generation costs in the system.
The power system generated 1,527 GWh of nuclear electricity in July, representing 10.10 percent of total generation. The cost of this generation was only Rs4.626 billion, translating into approximately Rs3.03 per unit.
At around Rs3 per unit, nuclear electricity cost less than one-tenth of the Rs47.38 per unit cost of RLNG-based generation.
The figures underline the importance of low-cost baseload generation in reducing the average cost of electricity and limiting pressure on consumer tariffs.
Domestic coal cheaper than imported coal
The July data also shows a substantial difference between domestic and imported coal generation.
Power plants generated 1,650 GWh from local coal, representing 10.91 percent of total generation. The generation cost stood at Rs17.184 billion, or approximately Rs10.4 per unit.
In contrast, 2,169 GWh, equivalent to 14.34 percent of total generation, was produced using imported coal at a cost of Rs35.427 billion.
The resulting generation cost of imported coal was approximately Rs16.33 per unit, considerably higher than the Rs10.4 per unit cost of domestic coal.
Furnace oil and diesel remain the most expensive options
The system also relied on two of the most expensive fuels—furnace oil and high-speed diesel—although their contribution to total generation was relatively small.
Around 215 GWh of electricity was generated from furnace oil at a cost of Rs10.773 billion. This translated into a generation cost of roughly Rs50 per unit.
Even more expensive was high-speed diesel generation.
Only 31 GWh of electricity was generated from high-speed diesel, but the cost reached Rs1.694 billion, putting the generation cost at approximately Rs54.5 per unit.
Although diesel represented a very small portion of total generation, its exceptionally high per-unit cost added further pressure to the overall fuel cost.
July generation cost exceeds reference by Rs2.52 per unit
According to the CPPA-G petition, total electricity generation during July amounted to 14,501 GWh, against a total generation cost of Rs139.370 billion.
The average generation cost therefore came to Rs9.6112 per unit, compared with the reference price of Rs7.0929 per unit.
The difference is approximately Rs2.52 per unit.
Under Pakistan’s monthly fuel adjustment mechanism, variations in fuel costs are passed through to consumers after regulatory approval. Therefore, the higher generation cost recorded in July is expected to translate into an additional charge on consumers’ electricity bills.
CPPA-G has sought approval for the adjustment, with the estimated impact placed at around Rs41 billion.
The real tariff issue is the cost of marginal generation
The July figures demonstrate that the overall electricity tariff is not determined simply by the average cost of the cheapest generation sources.
Pakistan generated substantial quantities of electricity from hydel and nuclear resources at relatively low costs. It also produced power from local gas and domestic coal at substantially lower rates than imported LNG.
However, when expensive thermal generation is required, particularly from high-priced imported fuels, it can significantly increase the average generation cost.
The Rs47.38 per-unit cost of RLNG, combined with Rs50 per-unit furnace oil and Rs54.5 per-unit diesel generation, illustrates the extent to which costly marginal generation can raise the overall monthly fuel bill.
Consumer impact now rests with NEPRA
The final financial burden on consumers will depend on NEPRA’s decision on the CPPA-G petition.
The regulator’s August 27 hearing will consider the proposed monthly fuel adjustment arising from July’s generation costs. If the requested Rs2.52 per-unit adjustment is approved in full, consumers will bear an estimated additional burden of approximately Rs41 billion.
The July generation data therefore provides a clear warning about the tariff consequences of expensive spot LNG procurement. With RLNG generation alone costing Rs77.198 billion for 1,629 GWh, the choice and timing of imported fuel purchases have become increasingly important not only for the power sector’s fuel bill but also for the electricity tariffs ultimately paid by consumers.
The central issue for policymakers is consequently no longer merely how much electricity is generated, but at what cost each additional unit is produced—and how much of that cost is ultimately transferred to consumers. Ends
