Since March 2026, the US–Iran conflict has sharply changed the economics of Pakistan’s power market. The System Marginal Price (SMP), the variable cost of the most expensive generating unit required to meet demand averaged around PKR 15 per unit in February and PKR 16 per unit in March 2026. It rose to PKR 40 per unit in April and averaged PKR 35 per unit from April to August 2026, against PKR 16 per unit during the same months of 2025. The principal drivers are higher fuel prices and, more critically, the unavailability of imported RLNG. This has pushed furnace oil…
Author: Muhammad Rehan-Dr. Muhammad Farhan-Dr. Ponum
For decades, Pakistan’s electricity sector operated largely under a single-buyer model. Generation, transmission and distribution were predominantly organized around state-controlled institutions, while electricity producers ultimately depended on a central purchasing arrangement. The introduction of private power generation under the 1994 Power Policy brought substantial private investment into generation, but it did not fundamentally alter the structure of the electricity market: there was still essentially one major buyer. That longstanding model is now approaching a significant transformation. Pakistan’s Competitive Trading Bilateral Contract Market (CTBCM) is designed to move the country from a single-buyer arrangement towards a competitive electricity market in which…
Pakistan’s electricity sector is entering a period of structural change. For years, the country has struggled with imported fuel dependence, volatile international energy prices, exchange-rate pressures, circular debt, and the high cost of maintaining an oversized electricity system. At the same time, consumers are increasingly turning to solar energy to protect themselves from rising electricity bills. The next phase of Pakistan’s energy journey, therefore, is unlikely to be dominated by a single technology. Instead, the country’s energy landscape is likely to be shaped by a combination of hydropower, Thar coal, biomass, and battery energy storage. Hydropower will remain an important…