AGL 6.45 No Change ▼ 0.00 (0%)
ANL 9.70 Increased By ▲ 0.20 (2.11%)
AVN 77.60 Increased By ▲ 2.65 (3.54%)
BOP 5.43 Increased By ▲ 0.08 (1.5%)
CNERGY 4.97 Increased By ▲ 0.17 (3.54%)
EFERT 77.25 Decreased By ▼ -0.75 (-0.96%)
EPCL 55.49 Increased By ▲ 1.34 (2.47%)
FCCL 15.36 Increased By ▲ 0.36 (2.4%)
FFL 6.48 Increased By ▲ 0.28 (4.52%)
FLYNG 7.47 Increased By ▲ 0.46 (6.56%)
GGGL 10.45 Increased By ▲ 0.40 (3.98%)
GGL 16.39 Increased By ▲ 0.45 (2.82%)
GTECH 8.37 Increased By ▲ 0.52 (6.62%)
HUMNL 6.45 Increased By ▲ 0.18 (2.87%)
KEL 2.93 Increased By ▲ 0.10 (3.53%)
LOTCHEM 28.34 Increased By ▲ 0.69 (2.5%)
MLCF 28.08 Increased By ▲ 1.08 (4%)
OGDC 73.85 Increased By ▲ 0.50 (0.68%)
PAEL 15.55 Increased By ▲ 0.25 (1.63%)
PIBTL 5.35 Increased By ▲ 0.20 (3.88%)
PRL 17.39 Increased By ▲ 1.29 (8.01%)
SILK 1.07 Increased By ▲ 0.03 (2.88%)
TELE 10.96 Increased By ▲ 0.51 (4.88%)
TPL 7.81 Increased By ▲ 0.12 (1.56%)
TPLP 19.66 Increased By ▲ 0.44 (2.29%)
TREET 23.85 Increased By ▲ 1.10 (4.84%)
TRG 126.90 Increased By ▲ 11.00 (9.49%)
UNITY 23.06 Increased By ▲ 1.26 (5.78%)
WAVES 11.55 Increased By ▲ 0.40 (3.59%)
WTL 1.14 Increased By ▲ 0.02 (1.79%)
BR100 4,126 Increased By 86.6 (2.14%)
BR30 15,495 Increased By 511.5 (3.41%)
KSE100 41,152 Increased By 531.3 (1.31%)
KSE30 15,420 Increased By 206.9 (1.36%)
Follow us

EDITORIAL: The summer came earlier this year with unannounced electricity load-shedding that later became scheduled. The timing coincided with the PDM (Pakistan Democratic Movement) assuming power. Right from day one, the new government started blaming the outgoing government for not procuring fuel for numerous power plants.

The problem was supposed to be solved in weeks. However, power load-shedding has only increased since. Now the blame is on the previous government that they have delayed the commissioning of some plants that were conceived and planned during the PML-N (Pakistan Muslim League-Nawaz) tenure (2013-18).

The media strategy is to pass the buck on to the others just as the PTI (Pakistan Tehreek-e-Insaf) government was doing for the rise in circular debt during its tenure by accusing the PML-N government of failing to initiate more than needed number of plants. The basic issue today is not of capacity as there is enough baseload generation capacity in the system to achieve nearly zero load-shedding. That was the case last year too as there was no or little load-shedding. However, the problem is quite different today.

The issue is not about the competence of PML-N or PTI. Whosoever would have been governing today, the result would be similar. The problem is financial in nature. International prices of coal, RLNG and furnace oil are too high for the country to afford, given its precarious balance of payment situation. At such a high fuel cost, the government finds itself unable to pass on this through increase in tariffs proportionately. Not doing so would exert pressure on the fiscal balance. Furthermore, at such a high-cost generators (Independent Power Producers) too are reluctant to generate at full capacity as they find it hard to finance the growing circular debt.

These are the basic reasons for the high load-shedding scenario today. Had there been additional capacity available on imported fuel, the fate of power generation would be no different. For example, the government is claiming that the PTI government had delayed the Punjab Thermal Power Limited (on RLNG) by 26 months. And this is leading to higher load-shedding. However, the shortfall of load generation on RLNG by existing three power plants was of 785MW as on 30th June 2022. This is due to not buying LNG at exorbitant spot rates. It is a right decision.

The net capacity of four plants based on imported coal — Sahiwal Coal, Port Qasim Coal, China Hub Power and Lucky Electric — shows a shortfall of 34,283MW. Three of these four plants are operating at sub-optimal level as the government has decided against using the insanely high priced imported coal for power generation as it would not be able to recover the cost.

Moreover, it cannot afford an additional strain on current account deficit. Last year, these plants were running at maximum capacity as coal prices were a mere fraction of what these are today. There are some transmission constraints that hamper the ability of China Power and Port Qasim plants to run at full throttle simultaneously. Lucky Electric, which runs on lignite coal (whose price is lower), was, however, closed due to technical reasons. Now it is back on the grid.

Similar is the story of plants running on furnace oil — such as Hubco. One nuclear plant (K2) is closed due to refuelling outage. Thus overall shortfall from big reliable power plants was of around 7,000MW as of 30th June 2022. The ‘woes’ of majority of these are due to non-availability of imported fuel. Some were closed due to technical reasons. The government has been arguing that the shortage is due to the previous government’s inability to bring five power plants of around 4,000MW online in time.

Well, last year the thorny issue was of capacity payments and the then government deliberately delayed some projects to lower the burden of capacity payment. And there was no load-shedding as such. The case would have been the same today had the fuel prices remained low. These plants are likely to be online by the next summer. In other words, if fuel prices normalise by the next summer, there would be no load-shedding.

And there would be less load-shedding in the remaining summer this year. Our hydel capacity is close to 10,000MW and half of it is not being obtained (end June) due to non-availability of water. That is a seasonal issue. With the onset of monsoon and glaciers melting, water availability would be better in coming months. Plus, the load on the national grid would be less due to falling temperatures.

The hard time has perhaps passed; the problem is in the long-term planning as for majority of the power plants of IPPs established under the 1994, 2002, and 2015 policies were envisaged on imported fuel. The lack of reliance on local coal and other fuel options has created this systemic problem, especially in days of high global fuel prices. The need is to fix this and to focus on indigenous fuel to generate power.

Copyright Business Recorder, 2022

Comments

Comments are closed.

Hassan Jul 18, 2022 01:10pm
Maybe if the country didn't spend 5 billion dollars a year importing edible cooking fats/oils (mainly Palm oil), tea, coffee, creamers, cocoa, sweets, sugar and tobacco, we could afford to import more essentials.. it's a cultural problem, we demand foods dripping in unecessary amounts of oil, super sweet tea & coffee, smoking and fizzy drinks like pepsi, Fanta etc every meal, based on imports, then complain we can't afford to import fuel for electricity
thumb_up Recommended (0)
akram Jul 18, 2022 04:14pm
longer term Wind power is the answer, Pakistan can generate a lot of wind power at competitively priced rates. wind power has the potential to be one of the cheapest sources of electricity, now that we also have offshore floating wind power. It requires only set up costs, no fuel import costs thereafter.
thumb_up Recommended (0)