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Print Print 2023-07-05

Imported fuel for power generation: Nepra blames forex scarcity for load-shedding

  • Nepra Chairman Tauseef H Farooqi says 63 percent of generation is based on imported fuels
Published July 5, 2023

ISLAMABAD: Chairman National Electric Power Regulatory Authority (Nepra), Tauseef H Farooqi said on Tuesday that one of the key reasons for power load-shedding in the country is scarcity of foreign exchange to import fuel as Pakistan’s 63 per cent generation is based on imported fuels.

He was responding to questions raised by Members of Senate Standing Committee on Power regarding prolonged forced load shedding in the country in the summer.

Senior Joint Secretary, Power Division, Alam Zeb Khan, who was alone from Power Division to face angry Senators, claimed that electricity shortfall is over 8,000-MW.

Fuel cost of power generation surges 24.6pc in April

However, Chairman Nepra noted that Pakistan’s installed capacity stands at 43,775 MW. The country’s current demand is 27,000 whereas generation is 21,000 – 22,000 MW, which implies that shortfall is between 5000-6,000 MW.

He said, 30,000 MW has been transmitted through the system and with addition of new transmission lines from south to north the capacity to transmit electricity has further improved.

Giving reasons for the load shedding, Chairman Nepra said that Pakistan’s 63 per cent generation is based on imported fuel, but the government does not have enough dollars to import fuel. Currently, generation cost is Rs 33 per unit. The electricity cost of RLNG-fired power plants is Rs 24 or Rs 24.5 per unit.

He further contended that when price of imported fuel is increased by 10 per cent, and if the rupee-dollar parity is 280, then it implies that cost of imported fuel generation has increased by 20 per cent. He further stated that electricity prices have increased over 100 per cent over the last one year.

The country’s power sector circular debt, which was Rs 2.646 trillion as of May 31, 2023 is expected to decline to Rs 2.370 trillion as of June 30, 2023.

“Purchase of fuel has now become very difficult for us due to foreign exchange issues,” he said adding that generation from Thar-coal is a blessing in disguise due to which cheap electricity is being produced.

Chairman Nepra once again opposed power load shedding based on Aggregate Commercial and Technical (AC&T) losses.

Chairman Standing Committee Senator Saif Ullah Abro asserted that since the government is paying over Rs 1 trillion capacity payments to Independent Power Producers (IPPs), the government should do away with load shedding in this scorching heat.

Secretary Power Division, Rashid Mehmood Langrial and joint Secretary (Transmission), Hadayat Ullah did not appear before the Committee despite a clear message from Chairman of the Committee that both officers be summoned.

During discussion on “dicey” 765-kV Dasu transmission line contract, the Committee decided to convene an in-camera meeting as NTDC top brass refused to share bidding documents of the project due to World Bank confidentiality clause, which is extending a loan of $ 800 million.

An interesting aspect of Committee proceedings was that the Chairman Standing Committee who had been accusing local officials of World Bank and the NTDC team for a “dicey” contract changed his stance. “Don’t drag the World Bank that is also doing projects across the country including Sindh, in this controversy as NTDC’s team is responsible for reported mis-procurement,” said Abro.

The meeting was attended by Senator Fida Muhammad, Senator Saifullah Sarwar Khan Nyazee, Senator Prince Ahmed Umer Ahmedzai, Senator, Haji Hadayatuallh Khan, Senator Bahramand Khan Tangi and Senator Sana Jamali.

Copyright Business Recorder, 2023

Comments

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Tulukan Mairandi Jul 05, 2023 08:23am
Isn't that a legacy issue with the $3 billion IMF joke?
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Tulukan Mairandi Jul 05, 2023 08:24am
Hallmarks of a country about to default
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Abdullah Jul 05, 2023 09:13am
Thats ok.we dont pay taxes so we will survive this heat with out electricity but we will not pay taxes to import this fuel and will also support all corrupt politicians as well.
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Tariq Qurashi Jul 05, 2023 11:25am
The way forward is to ensure that everyone has solar panels on their roof and are selling electricity to the grid. At present there is no mechanism to actually pay individuals for the electricity they produce; this needs to change and people actually need to be paid. Eventual self sufficiency in electrical production will save foreign exchange from the import of oil. There is also vast untapped hydroelectric potential in the country that needs to be exploited. The problem is that politicians only think short term till the next election. They want quick fixes. We need a long term energy transition plan to move to renewable energy that all political parties sign up to so there is continuity after changes in government. We also need to get out of the poor IPP agreements that bind us into paying them whether we use their expensive electricity or not.
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Muhammad Basharat Khan Jul 05, 2023 11:41am
Pls share all news
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Mehboob Ali Lalani Jul 05, 2023 12:35pm
Pakistan foreign exchange reserves is depleting. We are not importing fuel adequately and resorting power loadshedding. The government should setaside funds for import of fuel instead doling out funds on development schemes. The government needs to do restructuring and live within the income generation and not on borrowed money.
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Haq Jul 05, 2023 12:59pm
By creating electricity shortage hype in 1990s, PPP govt proposed IPPs, with hefty kickbacks (Surrey Palace, SGS / Swiss bank account scandals) & continued by successive govts. These agreements / investments are fully backed by IMF / WB & having draconian clauses of Capacity Payments in US$, penalties for any disruption in fuel supplies, etc. Musharraf deliberately switched over these IPPs to dwindling natural gas. Results are obvious, gas reserves depleted faster, import of costly LNG, refineries optimized for Furnace oil production are forced to export (340,000 tons in Q2 2023) low value fuel to keep refineries in operation, ever mounting energy sector circular debt, WAPDA bankrupted, inefficient DISCOs, transmission losses, distribution & theft of electricity. Country at the brink of bankruptcy...
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Dr. Shahid Rahim Jul 05, 2023 07:26pm
Chairman NEPRA has correctly said that 63% of our power generation is based on imports and we don’t have the FOREX to pay them. A critical question is who we should blame: the govt, NEPRA, or the entities downstream? I would say, all the three. Planning is always done in an uncertain world. Power planning is no exception. Uncertainty of demand, prices of primary fuels, and cost of capital, are critical variables power planners confront. They start with an expected value of these variables and then tests the impacts of a range of variations in these on his plan by creating different scenarios. He finally recommends a plan he finds robust to these plausible scenarios. This is the way power planning is done everywhere, except in Pakistan. Here, our govt would fix the assumptions for the planner, regulator would fix the way the planners should plan, and the planners with their hands tied lose any motivation to experiment. No wonder we are in a mess today. We've created it ourselves.
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Talal Rao Jul 06, 2023 12:18pm
@Haq, IPPs are the best thing happened in Pakistan power sector. The thing which was missed was privatization of DISCOs. Currently Transmission and Distribution losses are around 20% translate in 900 Billion PKR. While Capacity payments to all power producers including Govt owned were around 1000 Billion PKR. In Pakistan we dont have broader choices of Fuel for power generation. Thar Coal has been developed now because suitable technology and financing was not available earlier.
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Razi Raziuddin Jul 06, 2023 08:48pm
Pakistan is exporting fuel oil cheaply and import expensive fuel oil.
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