Power generation declines 9.5%
In the last four months, the country witnessed the highest power production of 34.5%, from a total of 51,786 GWh, from one of the cheapest sources – hydel. photo: afp
Power generation in Pakistan experienced a significant year-on-year decline of 9.5% during the fiscal year 2023 (FY23), according to a report by Arif Habib Limited (AHL) titled “Pakistan Power Sector Revealed.” The power generation dropped to 129,591 GWh (14,793 MW) in FY23, compared to 143,193 GWh (16,346 MW) in the same period last year.
The report attributes the decline in power generation to lower production from various sources, with Furnace Oil (FO) witnessing a sharp drop of 62% YoY, followed by coal at -22%, RLNG at -17%, wind at -11%, and gas at -2%. The overall decrease is attributed to a combination of factors, including the economic slowdown in the country and the increase in electricity tariffs, resulting in reduced domestic consumption.
Hydel power generation accounted for 28.0% of the total during FY23, followed by nuclear at 18.6%, coal at 16.0%, RLNG at 17.1%, gas at 11.2%, FO at 3.9%, wind at 3.2%, solar at 0.8%, and bagasse at 0.7%.
During FY23, power generation from FO, one of the costliest sources, witnessed a substantial 62% YoY decline. Coal-based generation also dropped by 22% YoY due to coal import and transmission constraints issues. However, nuclear-based generation increased by 32% YoY during the same period due to the addition of the Kanupp-3 plant to the national grid.
Speaking to The Express Tribune, AHL’s Head of Research, Tahir Abbas, highlighted that in June 2023, power generation in Pakistan declined by 1.2% YoY to 13,715 GWh (19,048 MW), compared to 13,876 GWh (19,272 MW) in June 2022. However, on a month-on-month basis, generation increased by 11.7%. For the entire FY23, the generation sloped by 9.5% YoY to 129,590 GWh (14,793 MW), compared to 143,193 GWh (16,346 MW) in FY22.
The AHL report also mentioned that during June 2023, the fuel cost for power generation decreased by 35% YoY to an average of Rs9.63/KWh, compared to an average cost of Rs14.72/KWh in the same period last year. The decline was attributed to cheaper local coal-based power plants and a reduction in prices of RLNG.
Looking ahead to FY24, the addition of Thar coal-based power plants, the impact of low-cost nuclear power plants that came online in FY23, the resumption of the Neelum Jhelum plant, and an expected increase in electricity demand are expected to drive a decline in fuel costs, he said.
The National Power Regularity Authority (Nepra) has indicated that the fuel cost is expected to decline from Rs1.2 trillion in FY23 to Rs0.9 trillion in FY24. However, despite the reduction in fuel costs, industries may not see major relief due to increasing capacity payments and electricity tariffs set by the government. The impact on sectors such as cement, textiles, long and flat steel, among others, may be significant.
Published in The Express Tribune, July 23rd, 2023.
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