The study undertakes efficiency analysis of thermal power generation in Pakistan with an eco-efficient perspective. Eco-efficient behavior ensures sustainability of nature, while eliciting the economic growth. Thermal power generation has a lion’s share in the fuel mix of the energy sector in Pakistan. The economic and environmental efficiency of 32 thermoelectric power plants was determined by Stochastic Frontier Analysis. The efficiency analysis revealed that none, among 32 thermoelectric power plants were operating on the efficiency frontier. The efficiency scores in two scenarios ranged between 0.50 – 0.65. The analysis showed that coal is the most inefficient technology, followed by Furnace Oil. However power generation by Gas is comparatively cheaper and environmentally less detrimental. Plants with higher generation capacities, and plant operated by private entrepreneurship turned out to be more efficient than the small plants, and state owned plants. Coal has the highest shadow cost Rs.8.54followed by Furnace Gil and Gas. The study concludes that power generation by combustion of fossil fuel is highly inefficient, both economically and environmentally. Therefore it is acclaimed that energy policies must be intertwined within the eco-efficient criterion. Moreover the study suggests the restoration of hydropower generation, which is both economically and environmentally valia Supervisor:- Dr. Rehana Siddiqui