MoF’s inability to provide funds leads to massive power loadshedding

ISLAMABAD: The Finance Ministry’s inability to arrange required funds for thermal generation has reportedly led to massive scheduled and unscheduled load shedding of 16-18 hours in rural areas and 6-8 hours in urban areas, sources in the Ministry of Water and Power told Business Recorder.

According to sources, the Federal Cabinet in its meeting on January 4, 2012, had agreed to extend only Rs 25 billion extra for January, against the demand of Rs 34.5 billion, of which less than Rs 6 billion has been released despite directives from Prime Minister Yousaf Raza Gilani.

According to the Ministry of Water and Power, the country is facing shortage of electric power during the current winter season mainly due to drop in the hydroelectric generation subsequent to the usual canal closure for maintenance at this time of the year and very little availability of gas and furnace oil for the thermal generation.

The generation capacity of hydroelectric power fell from 4900 MW in November, 2011 to 1200 MW in December, 2011 due to lower water requirements for irrigation by provinces.

Demand is as high as availability of gas for gas-fired units and low oil supplies to dual fuel operated (gas+RFO) thermal units. The IPPs are either closed or are not generating their full capacity due to non-payment of dues.

In January, hydel generation declined to 1000 MW. Normally, the situation improves in February when releases from dams increase and hydel generation peaks at 2500 MW. March 2012 is expected to have the average hydel generation for the month.

In order to ease current severe shortages through enhancing current generation of 8312 MW thereby reducing the quantum of load shedding and controlling unscheduled load shedding more thermal generation needs to be added during January, February and March.

The Ministry of Water and Power has worked out two options to deal with the situation, which are as follows. Option 1, the government has to extend additional Rs 34.5 billion in January 2012 to keep generation at 10,000 MW level which implies four-hour load shedding in urban areas and six hours in rural areas, whereas in February required additional funding will be Rs 55.7 billion, followed by Rs 55.6 billion in March.

Scenario 2, to generate 11,000 MW power and zero load shedding, NTDC will need extra funds of Rs 50.5 billion in January, Rs 62.3 billion in February and Rs 61.9 billion in March.

Pepco has to pay Rs 40 billion to IPPs, for fuel and to RPP Rs 19 billion capacity payment, Rs 5 billion to gas companies, nuclear and Wapda hydel and Rs 32 billion payment to Pakistan State Oil (PSO).

Sources said the government has to enhance the current generation of 8312 MW to 9500 in order to reduce the quantum of load shedding. Additional funds will have to be arranged by the Finance Division.

The Ministry of Water and Power had prepared a plan for January 2012 which is as follows: (i) additional subsidy to be allocated to ease load shedding in January; (ii) payment of AJK tube-well subsidy and KESC due to be expedited; (iii) debt swap of sector entities’ borrowing to be completed; (iv) additional cost recovery through passing of FPA to consumers; and (v) additional management of four hours in urban and 8 hours in rural areas.