Power cost rises 25% with heavy reliance on oil-based plants

This comes because cheap hydel production goes down in winter

KARACHI: The cost of electricity production rose 25% in January following higher generation by expensive oil-fired plants and lower output from hydroelectric power plants.



Average cost of power production came in at Rs6.39 per kilowatt-hour in January 2017 compared to Rs5.13 in December 2016. The cost was also lower at Rs5.53 in January 2016, according to data released by the power sector regulator.

The National Electric Power Regulatory Authority (Nepra) has reported that the share of furnace oil-based power production increased to 43% (3,005 gigawatt-hours) in the total output in January 2017 from 37.13% (2,673 GWh) in December 2016. In January last year, the production stood higher at 50% (3,387 GWh).

In comparison, zero-cost hydroelectric power generation dropped to mere 7.40% in January 2017 compared to 22.82% in December 2016 and 12% in January 2016. In November 2016, the output was even higher at 41%.

“Low water availability during winter badly impacted production from hydroelectric power plants in January this year,” commented an analyst.

Topline Securities analyst Hashim Sohail said, in a note to clients, hydel generation remained subdued as seasonality factor kicked in because of lower water levels in the winter season.

Nuclear power doubled

Nuclear power production doubled to 8% in the overall electricity output in January 2017 against 4% in the same month in 2016. It stood at 6% in December 2016.

The jump came after 340-megawatt Chashma-III power plant came online in December last year, it was leant.

After hydel electricity, nuclear power remained the cheapest source of power production. Its cost came in at Rs0.81 per kilowatt-hour in January 2017.

Also, January 2017 saw a notable increase in diesel-based power production, which appeared to be the most expensive. Pakistan produced 5% (362 GWh) at Rs13.71 per kilowatt-hour compared to 0.84% production at Rs12.03 in December 2016.

Power generation with the help of furnace oil cost Rs8.83 per unit in January 2017, which was the second highest expensive source, according to Nepra. In the first seven months of current fiscal year 2016-17, power generation rose 4%. Hydel and furnace oil-based production cumulatively captured 62% of the output, each having 31% share.



“The share of RLNG (re-gasified liquefied natural gas) and nuclear-based electricity widened by 4 and 2 percentage points to 4% and 5% respectively while gas-based generation contracted 5 percentage points to 24% during the period,” Topline added.

“Rising furnace oil prices (up 15% in seven months) has increased concerns over the circular debt. Thirteen IPPs reportedly invoked sovereign guarantees on March 3 to recover dues amounting to Rs48 billion within 10 days...Minister of Water and Power stated that the government would pay Rs30 billion, as approved by the ECC, next week, which may cause the IPPs to suspend the invoking of sovereign guarantees,” it said.

Published in The Express Tribune, March 10^th, 2017.

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