The country is producing less electricity than before, and people are still paying huge amounts in their bills to keep power plants running even when they are not generating any power. According to the Pakistan Electricity Review 2026, electricity generation dropped by 9% between FY22 and FY25.
One of the main reasons is the growing cost of capacity payments. These payments are made to power plants to remain available, even if they do not generate electricity. In FY25, capacity payments made up 61% of the total power purchase cost, showing a major increase compared to previous years.
The report also revealed that many thermal power plants are operating far below their actual capacity. Overall capacity usage in the country remained at only 43%, while some plants produced very little electricity despite receiving fixed payments.
This system is increasing pressure on consumers and the national economy. Even when electricity demand falls, the government must still pay independent power producers under long-term agreements. These costs are then passed on to the public through higher electricity tariffs.
This situation has raised serious questions about the power sector’s structure and the need for urgent reforms.
