Large electricity and gas shortages occurred in the backdrop of a sharp increase in international oil prices through calendar 2009, which put enormous upward pressure on cost structure in the power generation and transport sector.
According to the survey, lower accumulation of water reserves in dams compounded the problem, giving rise to inter-corporate circular debt in the entire energy supply chain. The circular debt is estimated at Rs103 billion.
It said lower availability of hydel resources for generation and a higher than normal shortage of gas pushed the power sector towards fuel oil. Since this occurred at a time of doubling of international oil prices, the effect on the cost structure of the utilities was amplified greatly.
The survey said gap between average power generation cost and recovery was close to 30 per cent which prompted hefty increases in end-user electricity tariffs over the past two years. However, despite that “a significant gap still exists between the generation cost and recovery.”
“This imbalance between the cost of generation and distribution, and the final tariff, is the root cause of the circular debt, with each downstream player in the energy chain being forced to delay payments to upstream entities (for fuel supplies).”
Losses
The survey showed that transmission and distribution (T&D) losses as a percentage of net system remained more or less stagnant between 21 and 25 per cent from 2000-01 to 2008-09. However during July-March 2009-10, T&D losses increased one per cent over the corresponding period last year.
Keeping in view these losses, the National Transmission and Distribution Company and power distribution companies took various technical and administrative measures to improve operational and managerial efficiency.
It said the Pakistan Electric Power Company (Pepco), in order to improve supplies, was working on various power generation projects having varying completion dates starting from 2009-10 to 2017-18 with a total generation capacity of 17,301 megawatts.
Supplies
The survey said the supply of petroleum products during July-March 2009-10 increased to 16.3 million tons from 14.2 million tons in the same period last year, a growth of 14.6 per cent. With high supplies, overall consumption of petroleum products increased by 8.1 per cent during the same period.
In the case of gas, supplies rose 1.6 per cent during July-March 2009-10 with overall consumption remaining higher. Gas consumption by the industry showed a significant increase of 5.3 per cent, especially after a decline of 1.1 per cent during 2008-09.
According to the survey, the number of consumers increased by 4.5 per cent to 19.3 million during July-March 2009-10 against a 4.2 per cent rise in the same period last year.
Published in the Express Tribune, June 5th, 2010.
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