Transmission constraints are preventing low-cost electricity generated in Sindh and southern Pakistan from reaching major consumption centres, forcing greater reliance on expensive RLNG and imported coal and increasing pressure on electricity tariffs, according to concerns raised by the FPCCI.
Pakistan’s electricity consumers are facing an estimated additional financial burden of more than Rs400 billion annually due to transmission constraints that prevent cheaper electricity from reaching major consumption centres across the country.
The National Grid Company (NGC), formerly known as the National Transmission and Despatch Company (NTDC), is facing scrutiny over the transmission bottlenecks that limit the transfer of relatively inexpensive electricity from Sindh and southern Pakistan to high-demand areas in the north.
These constraints are forcing the power system to rely more heavily on expensive regasified liquefied natural gas (RLNG) and imported coal-based generation, while lower-cost electricity from Thar coal, nuclear power and wind energy remains underutilised.
The resulting inefficiencies are adding to Pakistan’s electricity generation costs and raising concerns about the performance of the national transmission network, particularly as consumers continue to face high power tariffs.
FPCCI Raises Concerns Over Rs400 Billion Transmission Losses
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has questioned the financial implications of transmission-related inefficiencies in its response to the proposed Calendar Year 2027 (CY2027) Power Purchase Price Reference.
In its submission concerning the Central Power Purchasing Agency’s (CPPA) petition, the business organisation argued that electricity consumers should not be required to bear the financial consequences of inadequate transmission infrastructure.
The FPCCI called for accountability over the inability to transport cheaper electricity to major consumption centres despite the availability of lower-cost generation capacity.
The issue also came under discussion during a National Electric Power Regulatory Authority (NEPRA) hearing on the June 2026 Fuel Cost Adjustment.
During the proceedings, transmission constraints were reported to have created an annual financial burden exceeding Rs400 billion.
Based on projected electricity generation of 130,081 gigawatt-hours, the additional burden translates into approximately Rs3.07 per unit.
This additional cost highlights the financial implications of transmission bottlenecks for households, commercial establishments and industrial consumers.
RLNG Electricity Costs Significantly More Than Thar Coal
The difference in fuel costs among electricity generation sources illustrates the potential financial benefits of improving Pakistan’s transmission infrastructure.
Figures cited in the regulatory proceedings show that the fuel cost of RLNG-based electricity stood at Rs35.5087 per unit in June 2026.
In comparison, the fuel cost of Thar coal-based electricity was Rs11.4629 per unit, while nuclear power recorded a significantly lower fuel cost of Rs2.8501 per unit.
The comparison highlights the substantial difference between expensive imported fuel-based generation and relatively cheaper domestic or nuclear energy sources.
| Electricity generation source | June 2026 fuel cost per unit |
|---|---|
| RLNG | Rs35.5087 |
| Thar coal | Rs11.4629 |
| Nuclear power | Rs2.8501 |
Replacing RLNG-based generation with Thar coal could reduce fuel costs by approximately Rs24.05 per unit, based on the reported figures.
The difference between RLNG and nuclear fuel costs is even greater.
However, these figures represent fuel costs rather than the complete cost of electricity generation. Actual savings would depend on plant efficiency, transmission availability, operational constraints and other system-related expenses.
Transmission Bottlenecks Prevent Cheaper Electricity From Reaching Northern Pakistan
Pakistan’s electricity generation resources and consumption centres are geographically distributed, making an efficient national transmission network essential for reliable and economical power supply.
Sindh and southern Pakistan host several major electricity generation facilities, including Thar coal-based plants and wind power installations.
However, limitations in the transmission system can restrict the amount of electricity that can be transported from these facilities to areas with higher demand.
When lower-cost electricity cannot be delivered efficiently, the power system may have to rely on more expensive alternative generation sources to meet demand.
This can increase the overall cost of electricity procurement and place additional pressure on consumer tariffs.
The situation has renewed questions about transmission investment, network expansion and the operational performance of the National Grid Company.
FPCCI Questions Proposed Increase in Fixed Electricity Charges
Apart from transmission inefficiencies, the FPCCI has raised concerns about the proposed increase in fixed electricity charges, particularly capacity payments.
The business organisation has questioned whether additional revenue generated through higher fixed charges could contribute to maintaining disproportionately high salaries, benefits and administrative expenses among senior executives of power-sector entities.
Its concerns extend to managing directors, chief executive officers and other senior officials across the electricity sector.
The FPCCI has called for greater scrutiny of administrative expenditure and financial management within these organisations.
Capacity payments are a significant component of Pakistan’s power-sector cost structure because they compensate power producers for committed generation capacity, subject to contractual arrangements, regardless of the electricity actually generated.
The debate over these payments has become particularly important as consumers continue to face elevated electricity bills.
FPCCI Warns Higher Fixed Charges Could Offset Tariff Relief
The FPCCI has also cautioned that proposed reductions in variable electricity charges could create a misleading impression of lower tariffs if accompanied by increases in fixed charges.
According to the business organisation, shifting a greater proportion of electricity costs towards fixed charges could leave consumers with limited financial relief, even if variable energy rates decline.
Electricity bills comprise several components, including energy charges, capacity-related costs, taxes, surcharges and other applicable adjustments.
Therefore, the overall impact of any proposed tariff revision must be assessed by considering both fixed and variable charges rather than focusing on individual components.
The FPCCI has urged greater transparency in determining electricity prices and ensuring that consumers are not burdened with avoidable operational and administrative costs.
What Transmission Inefficiencies Mean for Electricity Consumers
The reported annual burden exceeding Rs400 billion highlights the economic consequences of weaknesses in Pakistan’s electricity transmission infrastructure.
For domestic consumers, higher power procurement costs can contribute to increased electricity tariffs and affordability pressures.
For industrial and commercial users, expensive electricity increases operating costs, affects production expenses and can weaken the competitiveness of Pakistani businesses.
Improving transmission capacity could help increase the utilisation of lower-cost generation facilities, reduce dependence on expensive imported fuels and improve the efficiency of electricity procurement.
However, achieving these savings would require targeted infrastructure investment, effective grid management and coordination between generation companies, transmission operators and regulatory authorities.
Pakistan’s Electricity Tariff Debate Extends Beyond Generation Costs
The FPCCI’s concerns highlight a broader challenge facing Pakistan’s power sector: reducing electricity prices requires addressing inefficiencies across the entire electricity supply chain.
Although generation costs remain an important component of consumer tariffs, transmission constraints, capacity payments, administrative expenditure and other system-related costs also influence the final price of electricity.
The proposed CY2027 Power Purchase Price Reference has therefore brought renewed attention to the financial and operational performance of the country’s electricity sector.
Greater transparency, improved transmission infrastructure and better utilisation of available low-cost energy sources could help reduce avoidable costs.
Ultimately, electricity consumers should benefit from improvements in the power system rather than continue bearing the financial consequences of infrastructure and operational inefficiencies.
