Pakistan generated less electricity at sharply higher cost in June, as disrupted LNG supplies and expensive fuel-based generation pushed the average cost up by 14%, even as the government moved towards privatising three major distribution companies and concerns persisted over delays in setting electricity tariffs. Total electricity generation fell by 2.5% year on year to 13,413 gigawatt-hours (GWh) in June 2026 from 13,744 GWh a year earlier. Yet the average generation cost climbed to Rs8.9885 per kilowatt-hour (kWh), compared with Rs7.8698 in June 2025. The combination of lower output and higher costs reflects strains across Pakistan's energy mix. LNG supply from Qatar was disrupted after the supplier extended force majeure amid a war-like situation in the Middle East, while problems at the Tarbela generation facility reduced hydropower output. Hydel generation, still the largest source during the month, declined by 3% to 5,242 GWh from 5,410 GWh. It nevertheless provided 39.03% of total electricity product ion. The squeeze on gas-fired generation was considerably sharper. Electricity produced from regasified liquefied natural gas fell to 1,480 GWh, representing 11.02% of the total, from 2,216 GWh in June 2025. At the same time, its generation cost surged by 62%, to Rs35.51 per kWh from Rs21.87. Generation using indigenous gas also dropped, falling by 10.5% to 867 GWh from 968 GWh. Its cost was Rs13.6820 per kWh. The shortage of cheaper sources led the Independent System and Market Operator to allow generation from high-speed diesel and residual fuel oil at considerably higher costs. HSD-generated electricity cost Rs57 per kWh and RFO generation Rs52 per kWh in June. The contrast with a year earlier is striking. The National Power Control Centre generated 151 GWh using RFO in June 2025 at Rs29 per kWh. The latest figure therefore represents an increase of about 80% in the cost of RFO-based electricity. Coal provided a mixed picture. Generation from domestic coal decreased by 10% to 1,358 GWh from 1,510 GWh, wh ereas electricity produced using imported coal increased by 21.6% to 1,699 GWh from 1,397 GWh. Nuclear power helped offset some of the declines elsewhere. Its contribution increased by 31.5% to 1,800 GWh from 1,383 GWh a year earlier, accounting for 13.40% of total generation. Renewables also recorded gains. Wind generation rose by 29.5% to 676 GWh from 522 GWh, while bagasse-based output increased to 46 GWh from 35 GWh. Solar generation edged up to 110 GWh from 106 GWh. Pakistan also imported 47 GWh of electricity from Iran during June, the same volume as a year earlier. But the price increased by 23% to Rs27.6635 per kWh from Rs22.5155. According to Central Power Purchasing Agency-Guarantee data, delivered energy amounted to 13,066 GWh at an average cost of Rs8.9138 per kWh, compared with 13,310 GWh at Rs7.6800 a year earlier. The higher generation bill is set to feed into the tariff mechanism. CPPA-G has requested a positive fuel-cost adjustment of Rs1.20 per kWh for June, compared with Rs0.6541 per kWh i n June 2025. The National Electric Power Regulatory Authority was scheduled to hold a public hearing on July 29. The immediate pressure on generation costs comes as Pakistan attempts a more fundamental restructuring of its electricity industry. The Privatisation Commission Board has recommended that the Cabinet Committee on Privatisation approve restructuring plans for the first batch of distribution companies to be privatised: Faisalabad Electric Supply Company, Gujranwala Electric Power Company and Islamabad Electric Supply Company. The plans are based on audited financial statements for the period ended March 31, 2026. The proposed framework is intended to preserve commercial viability for prospective private investors while maximising value for the government. A government-owned Special Purpose Vehicle would be established to separate selected assets and liabilities from the three companies. The arrangement is intended to create a transaction structure suitable for their eventual privatisation. The Priv atisation Commission said there had been strong interest from domestic and international investors. Deadlines for expressions of interest have been set for August 7 for FESCO, August 21 for GEPCO and September 7 for IESCO. The government's restructuring agenda extends beyond electricity distribution. The Privatisation Commission Board has formed two transaction committees to oversee outsourcing of Islamabad, Lahore and Karachi airports. The Asian Development Bank has been appointed financial adviser for outsourcing Islamabad International Airport, while financial advisers for Lahore and Karachi airports are still being selected. Yet changing ownership structures will not by itself resolve another persistent weakness in the electricity industry: the length of time it takes to determine tariffs. Nepra's multi-year tariff determination for the National Grid Company covering FY23 through FY25 has highlighted the problem. The regulator substantially reduced NGC's claimed revenue requirement and issued operational and governance directives, but the determination arrived after the period to which much of it applied. Such delays undermine the purpose of multi-year tariffs, which are supposed to give utilities sufficient certainty to plan investments and consumers some visibility over future charges. When decisions arrive late, prior-year adjustments accumulate and costs are eventually recovered retrospectively. The problem extends across generation, transmission and distribution. Utilities may wait years for their revenue requirements to be finalised, leaving them to undertake large investment programmes without timely regulatory signals about allowable returns. That uncertainty can ultimately increase financing costs, defer investment or produce larger adjustment claims later. Consumers are not necessarily spared: delayed tariff increases tend to reappear through prior-year adjustments, potentially in larger and less predictable amounts. There have nevertheless been improvements in regulatory oversight. Performance be nchmarks have become more demanding, investment plans face greater scrutiny, and third-party verification, reporting requirements and governance standards are increasingly incorporated into tariff determinations. Nepra's latest NGC decision includes directives covering transmission losses, project implementation, investment monitoring and institutional reforms. The regulator has also instructed NGC to file its next multi-year tariff petition immediately. The broader challenge is to make the entire process - from tariff petitions and consultations to hearings and final determinations - operate within predictable timelines. Pakistan's electricity reforms have traditionally concentrated on losses, recoveries and circular debt. But regulatory timing has consequences of its own: predictable tariffs can improve investment planning, reduce financing uncertainty and limit retrospective recoveries. That requirement becomes more pressing as the industry is reorganised. The National Grid Company and Independent System a nd Market Operator are assuming increasingly distinct functions, while distribution companies are being prepared for private ownership. June's generation figures show why those institutional changes matter. Pakistan produced less electricity while paying substantially more for it, with disruptions to LNG and hydropower forcing greater reliance on costly alternatives. Privatisation may change who operates parts of the system, and stricter regulation may improve accountability. But the immediate challenge remains stark: an electricity sector in which external supply disruptions can quickly translate into higher generation costs, while delayed regulatory decisions risk passing yesterday's expenses on to tomorrow's consumers.