Flat generation; rising pressures
All this has happened despite a sharp rise in installed capacity. Back in FY20, the capacity component of the Power Purchase Price (PPP) for nearly the same number of units cost Rs794 billion—Rs7 per unit. Fast forward to FY25, and the capacity bill for the same output has ballooned to Rs17.5 per unit, with the official reference assuming Rs15.9 for a hefty Rs2.1 trillion bill for capacity charges. A 6 percent shortfall from reference generation means additional fiscal burden—an outcome the system can scarcely afford.
Fortunately, the fuel component of the PPP offered some relief, with international commodity prices and the PKR largely stable through FY25. But that alone won't bail out the system.
What's more troubling is that the dip in grid generation doesn't reflect a proportional fall in national demand. Rooftop solar continues to pull demand off the grid, a trend flagged repeatedly in thisspace. At the same time, industrial users' reliance on captive power has kept grid demand suppressed. The recent shift in policy to push industries back to the grid will reclaim some of that lost demand—but not all.
The household and commercial segment, especially those milking the overly generous net metering regime, will continue to shrink grid reliance. Reports suggest the Prime Minister has again blocked reforms to rationalize solar payback—the third such intervention in under a year. While solar remains viable (and should), the current net metering policy desperately needs fairness and balance to avoid systemic distortions.
Finally, don't expect GDP to come to the rescue. Pakistan's near-term growth outlook remains muted—meaning organic demand revival will be slow. Tariff reliefs and subsidy-led pushes may offer short-term support, but the real test lies in restoring grid demand at affordable rates. Without that, the system's structural imbalances will persist.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
19 minutes ago
- Business Recorder
Diplomatic, official passport holders: UAE activates visa waiver, says Dar
ISLAMABAD: Foreign Minister Ishaq Dar on Sunday announced that the United Arab Emirates (UAE) has formally implemented a visa exemption facility for holders of Pakistani diplomatic and official passports, effective from July 25, 2025. Dar, who is currently in the US, in a post shared on X, stated that the visa waiver was agreed upon during a bilateral meeting with UAE Deputy Prime Minister and Minister of Foreign Affairs Sheikh Abdullah bin Zayed Al Nahyan, held in Abu Dhabi on June 24, 2025. The meeting culminated in the signing of a memorandum of understanding (MoU), outlining mutual visa exemptions for diplomatic and official passport holders of both countries. Pakistan, UAE sign visa exemption agreement for select passport holders 'The MoU, which both sides signed to formalise the exemption, was to take effect 30 days from the date of signature,' Dar said. He confirmed that UAE authorities have now operationalised the agreement, allowing Pakistani diplomatic and official passport holders to enter the UAE without requiring a visa. The facility has been made applicable across all UAE ports of entry as of July 25, 2025. Furthermore, Dar noted that reciprocal arrangements have also been extended to UAE nationals. 'Holders of UAE diplomatic and official passports will now be able to avail visa-free entry at all Pakistani airports,' he added. At the same time, sections of the public criticised Prime Minister Shehbaz Sharif Administration for turning a blind eye to the increasingly stringent visa restrictions imposed by the UAE on ordinary Pakistani citizens, particularly labourers, while extending facilitation to VIPs. They pointed out that those who contribute to the national economy through remittances earned by hard labour abroad are left without institutional support, even as the authorities go out of their way to ease travel for officials and privileged individuals - who can now enter the UAE without a visa. Critics argued that the government must show equal concern for the working class, whose mobility is increasingly constrained despite their significant economic contributions. Copyright Business Recorder, 2025
Business Recorder
19 minutes ago
- Business Recorder
NBP upgrades ATM services on Murree Road
ISLAMABAD: The National Bank of Pakistan (NBP) has upgraded its ATM services at the Passport Office Branch on Murree Road, Rawalpindi, by revamping an existing ATM and installing an additional machine to meet growing customer needs. The inauguration ceremony was held in the presence of GM NBP Islamabad Cluster Imran Gul, NBP Operations Chief Rawalpindi Syed Anjum Naseer, and Regional Head Majid Chaudhary. The event was also attended by valuable local customers, reflecting strong community engagement and appreciation for the improved facilities. On this occasion, Anjum Naseer briefed that with this upgrade, the number of NBP ATMs in the region has reached 81. Copyright Business Recorder, 2025
Business Recorder
19 minutes ago
- Business Recorder
IT exports
Pakistan's IT and ICT exports touched a historic high in FY25, clocking in at $3.8 billion. That's an 18 percent jump over last year, though shy of the government's $4 billion target and slower than the 24 percent growth seen in FY24. June alone brought in $338 million, up 14 percent year-on-year and 3 percent month-on-month, taking monthly exports above the 12-month average of $314 million. Net IT exports (after imports) also reached $306 million for the month, up 20 percent year-on-year. The story remains anchored in computer services, which pulled in $3.24 billion, up from $2.65 billion last year, while telecom exports stalled at $554 million. Information services, though small, more than doubled to $21 million, hinting at a slow but growing diversification within the export basket. Yet, even with the record-breaking performance, the missed target underscores persistent structural bottlenecks. Pakistan's IT sector still grapples with talent shortages, rising wage pressures, and patchy connectivity, while global tech spending slowed as firms cut back on budgets. Tax and payment reforms have also lagged, limiting exporters' ability to fully ride global demand. The slower growth rate in FY25 compared to FY24 can also be attributed to a base effect since FY24 had already seen an unusually high jump of 24 percent year-on year. Policy support has, however, cushioned the sector. The State Bank allowed exporters to retain 50 percent of their foreign earnings (up from 35 percent) and even invest abroad, encouraging them to repatriate a larger share of profits. Pakistani IT firms have also been busy expanding their global footprint, tapping into the GCC market, and highlighting at international events like London Tech Week 2025 and the Pak-US Tech Investment Conference. A decade ago, IT exports accounted for barely 2–3 percent of Pakistan's goods and services exports; today, they are close to 10 percent. The government's ambition is to hit $10 billion by FY29 under the 'Uraan Pakistan' plan, which implies an annual growth rate of 27 percent. Whether that materializes will depend on how fast Pakistan can fix infrastructure gaps, build a skilled talent pipeline, and simplify its regulatory framework. Copyright Business Recorder, 2025
