The performance of government run power generation plants has not been something to boast about. Nepra’s recently released report on their performance notes the poor state of affairs at these GENCOs due to equipment deterioration and poor management amongst other reasons.
Yesterday, this column highlighted the need for a revision in policy of the government’s dominant role in the power sector in light of the findings of the report. Despite being the biggest player, it is inarguably also the most inefficient one. Nepra puts the total energy wasted by GENCOs in FY15 and FY16 at a staggering 15 billion KWh!
In its conclusion, “Performance evaluation report of public sector GENCOs FY14-16” puts the energy loss by GENCOs to three things. First is the excess consumption of auxiliary power during service mode than the allowed limit set by the regulator.
Second is auxiliary power consumption during standby mode as many GENCOs remained idle for long durations during the period observed. Lastly, the public sector generation plants also shut down more frequently utilising more than permissible outage hours under their PPAs.
The loss in energy due to these factors is shocking. According to Nepra, 668 million kWh of energy was lost due to excess consumption of auxiliary power by the units of public sector GENCOs during operations which could be contributed to national grid otherwise.
Almost 382 Million KWh of energy was lost due to auxiliary power consumption by the units of GENCO-I, II & III during standby mode. According to management of these GENCOs they were on standby mode due to instructions from National Power Control Centre (NPCC) and also due to fuel constraint.
This was despite the fact that the per unit rate of furnace oil based power plants such as TPS Jamshoro and TPS Muzaffargarh fell considerably during 2015-16 as compared to the previous year. The story was the same for gas based power plants with generation at 5-7 Rs/KWh.
But the average utilisation was illegitimately low with TPS Guddu at 11 percent and TPS Faisalabad at 15 percent! Why did the NPCC issue instructions to GENCOs to remain on standby mode despite generation being cheap? Why were the benefits of reduction in fuel prices not realized?
The last startling number is the lost generation of almost 14,109 million KWh of energy due to going overboard the limit of scheduled and unscheduled outages. More than 70 percent of this figure was contributed by TPS Guddu.
Who should be held responsible for this negligence that led to almost 15 billion KWh of energy being wasted? Had this energy been supplied to the grid during 2014-16, the number of hours of load shedding would have been considerably less.
These numbers should be ringing alarm bells in policymaking quarters. The government should already be aware of the inefficiency of its GENCOs given the report has come it with a delay of almost one year. Yet it is still setting up more power plants while also tilting the incentives towards itself.
This is evident in the recent modification to allow “take or pay” contracts for only government run power plants and CPEC projects. As there is no seemingly no end to the poor governance of state-run power institutions , the least that could be done is stop wasting more energy and cash by starting to limit its own role and encourage private sector participation.
Put simply, shareholders want to maximize their wealth and an inefficient power plant will be penalised. However, despite years of abysmal performance government run GENCOs continue to burn cash with no accountability mechanism whatsoever. At the end of the day, the patient consumer is ready to be sacrificed by over billing and load shedding.
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