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Power generation in March 2019 at 9.7 billion units stood 4 percent lower year-on-year. This marks five months on the trot for year-on-year power generation decline. The 10MFY19 power generation is higher by just 1 percent to 94 billion units. The slowdown in demand is more evident from the 12-month moving average – which is also at a 10-month low at 10 billion units a month.

Meanwhile, the dependable generation capacity has increased by over 20 percent year-on-year to 30600 MW. Pakistan would, at best, register no growth in power generation on fiscal year basis, if it is lucky to not post a decline. But surely, the slowdown is not going to last forever, and demand will come – only a matter of when and not if. But more efforts need to be put in having more connections on the grid and spur demand – primarily to reduce the impact of capacity payments on unit cost. (See: capacity payments: the elephant in the room, published May 18, 2019)

On an appositive note, RLNG made a strong comeback, generating up to 3 billion units – significantly up from previous six-month average of 1.4 billion units per month. This will also help ease some pressure on the capacity payment front – should the trend continue deep in the summers. The overall generation mix has improved from previous year, as the FO based power generation from 25 billion and 19 billion units in FY17 and FY18, has narrowed down to 8 billion in 10MFY19. The trend suggests that it will continue to drop further – although it may not be completely wiped out, as the inefficiencies in the refinery chain means some FO will have to be procured and be used.

The fuel cost component in 10MFY19 has averaged Rs5.36 per unit, which is 8 percent higher year-on-year at Rs5/unit. The total fuel bill in the fiscal year to date for almost similar generation stands at Rs520 billion, versus Rs481 billion in the same period last year. This is despite visible improvement in generation mix. The absolute prices of gas, RLNG, and coal have gone up from last year, inflating the fuel cost component.

But the fuel cost component could have been worse had it not been for much balanced generation mix. But availing the true benefit of improved generation mix will remain elusive, until a way is found to have more demand in the system. The capacity payments have risen to alarming levels, and affordable power is a distant dream today, despite significantly improved availability.

Copyright Business Recorder, 2019


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