Which companies benefit most from the drop in power costs? And who takes a hit?

In July 2025, the cost of generating electricity in Pakistan fell by 14% year-on-year, coming down to Rs 8.18 per unit compared to Rs 9.49 last year. This is a big deal for industries because electricity is one of their largest expenses.

So, who benefits from this drop?

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Winners: Industries that use a lot of power:

• Cement companies like DG Khan, Lucky, and Cherat, cement production require huge kilns that consume massive energy. Lower power costs improve their margins.
• Steel makers such as Mughal Steel and Amreli, melting scrap and running furnaces, are highly electricity-intensive. Cheaper power directly boosts their profitability.
• Automobile manufacturers: cheaper power helps reduce factory running costs, supporting a sector already rebounding strongly.

Who takes a hit?

• Independent Power Producers (IPPs): These companies sell electricity to the grid at rates linked to their generation costs. When overall generation costs fall, their tariffs and revenues can also take a hit.
• Companies relying on high-cost fuels like RLNG and Furnace Oil may see reduced competitiveness, as coal and hydel power become cheaper alternatives.

In short, industrials win big from cheaper electricity, while some power producers feel the squeeze.

Now the big question for investors: will this trend of lower costs continue, and how much of it will companies pass on to customers versus keeping as higher profits?

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →