NEPRA opposes any govt move to slash power tariff

Capacity surplus in 2022-25 may not be available due to issues arising from hydel projects

KARACHI: While the PTI government is reviewing options to avoid the anticipated high inflation in a faltering economy, the power-sector regulatory authority has opposed any government move to slash tariff for end-consumers.

If the government implements any such plan, the tariff reduction will potentially hurt the upcoming power generation projects and the country may continue to face outages, according to the National Electric Power Regulatory Authority (Nepra).



“It is noted that the federal government’s efforts to lower the overall end-consumer tariff may impact (upcoming power generation projects) if, in addition to lowering fuel costs, the capacity cost is not kept at an affordable level,” Nepra said in its latest State of Industry Report 2017 on Thursday.

“Addition of new power generation capacity to reduce and totally eliminate power shortages makes economic sense as the unserved energy impacts negatively the economy of the country,” it added.

The regulator warned that even if new power generation projects continued to come on line as per their original schedule, Pakistan may return to power shortages from 2022 due to the emergence of multiple issues in implementing large hydroelectric power projects.

“It is also to be noted that the capacity surplus in later years ie 2022-25 may not be available due to multiple issues and resulting uncertainties in completion of large hydro-based power projects,” it said.

Production to double in 7 years

In the report, Nepra, however, anticipated that the country would continue to have surplus power with the coming on line of new projects that would double the installed production capacity in the next seven years.

The installed capacity of power generation stands at 33,961 megawatts at present, which will double to 62,185MW by June 30, 2025.

Besides, consumers will continue to create additional demand in the range of 4.07-4.51% per year till 2025. If all the planned projects come on line on the scheduled time, the country would have 13,934MW in surplus power by 2025.



Projects cancelled

Nepra noted that a number of letter of interest (LOI) holders for hydroelectric power project sites were inordinately delaying the development work. Accordingly, directives were issued to relevant agencies to cancel all those LOIs and letters of support (LOS).

As a result, a number of LOIs and LOS were cancelled by the implementing agencies and the process for their speedy development was initiated. These include the large Sehra hydroelectric power project of 130MW, Madian project of 157MW, Asrit-Kedam project of 215MW and Chakothi-Hattian project of 500MW.

K-Electric asked to improve

Based on investment plans, K-Electric could barely meet the expected demand at peak times till 2020 and outage of a power plant or outage of a single unit of around 200MW may result in overall breakdown of the system, Nepra said.

“Even the surplus expected in 2021 will not be enough to operate the K-Electric system with technically prudent margins,” it said.

Due to aging and deterioration of generation facilities, the company’s present capacity is around 1,973MW. Since the company is responsible for maintaining integrated systems of generation, transmission and distribution, it is required to look for other sources to meet the supply and demand gap.

“The energy generated during FY 2016-17 through K-Electric’s power plants is noted as 10,147GWh which shows a decrease of 176GWh as compared to the previous year,” Nepra said.

“During the year, K-Electric continued to underutilise its own power plants and it was also noted to ignore merit order operation of its power plants,” it said.

Published in The Express Tribune, September 28^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.