It does not make headlines anymore, but electricity generation continues to dwindle month after month. At 8 billion units, power generation stayed 5 percent lower year-on-year. For 1HFY23 – the generation is lower by 11 percent year-on-year, whereas it is virtually unchanged on a CY basis for 2022 at 133 billion units. Demand has surely gone down, but power generation in the system is not necessarily an indication of peak demand – as the economy of generation continues to be the decisive factor.
On moving 12-month average, generation at 11 billion units is now just 0.5 percent higher year-on-year – having been growing north of 10 percent a year ago. This is the lowest growth in over 20 months, as Pakistan’s authorities find themselves firefighting for fuel availability, Given the paucity of dollars, power generators continue to run far from optimal levels – as load shedding has increased in the last few months. Anecdote suggests the peak demand would have come down, from all segments, domestic, commercial, and industrial – following base price revision.
The system operator has not been able to run the most efficient plants at full throttle despite the availability factor of over 90 percent for the most part of the year. RLNG-based power generation for CY22 at 23 billion units is the lowest since CY17. Recall that Pakistan could not afford imported gas for the most part of CY22 at the peak of the commodity super cycle, and when the prices declined there was not enough spare ELNG for Pakistan to arrange. And now, that the prices have receded significantly and availability for Asian buyers has improved – Pakistan does not seem to have enough dollars to dole out for gas.
Coal-based plants also generated the least in four years, despite the capacity having doubled during that time. Nuclear generation has come to the rescue, keeping the system from completely collapsing under the weight of imported fuel requirements. The worst may not have come yet, as imports won’t be any cheaper in the near future – both from pricing and dollar availability perspectives.
Any increase in electricity tariffs, as prescribed by the IMF, is likely to complicate the equation further. Industrial activity has continued to slip, and that means more financial burden on the system, as industrial consumers pay in time and don’t engage in theft – at a mass scale. Tariff increase also means higher T&D losses and lower recovery from the domestic sector – which would keep the circular debt high. The only respite is a slowdown in monthly fuel price adjustments. But that could all be meaningless very soon, when the price goes up once again, through a base tariff or a surcharge.