Karachi: Power generation in April 2025 soared to 10,513 gigawatt-hours (GWh), marking a significant increase of 22 percent compared to April of the previous year and a 25 percent rise month-on-month. This surge was primarily driven by increased cooling demand due to rising temperatures and a shift away from captive generation by industries.

Key contributors to the power generation mix included coal, hydel, re-gasified liquefied natural gas (RLNG), and nuclear sources, according to a recent report from AKD Securities Limited.

The rise in power generation comes on the heels of a new levy imposed on gas-based captive power plants (CPPs) in March 2025. Authorities introduced a levy of 791 Pakistani rupees per million British thermal units (mmbtu), raising the gas tariff to 4,291 rupees per mmbtu. This adjustment resulted in a substantially higher effective generation cost of approximately 42 rupees per kilowatt-hour (kWh) for off-grid captives using natural gas, assuming a thermal efficiency of 35 percent.

This increase in generation costs has likely led industries to transition towards using grid electricity, which has become relatively cheaper thanks to recent reductions in grid tariffs. The estimated cost for grid electricity now stands at approximately 28 rupees per kWh, excluding taxes and duties.

Moreover, the cost of power generation experienced a decline, with a 5 percent year-on-year decrease and an 8 percent month-on-month reduction, bringing it down to 8.95 rupees per kWh in April 2025. This decrease from 9.75 rupees per kWh in April 2024 reflects improved fuel economics.

Overall, total power generation for the first ten months of the fiscal year 2025 was reported at 100,648 GWh, remaining broadly unchanged from the previous year.

These developments reflect a dynamic shift in the energy landscape, driven by economic factors and the evolving demands of industries and consumers.