Power generation cost rises 8.5 pc y/y in February amid decline in output

KARACHI: The power generation costs surged by 8.5 percent in February compared to the same month last year, amidst an 8 percent drop in overall power generation, according to recent data.

The rise in fuel costs for power generation was primarily driven by significant increases in the costs of nuclear, coal, and gas. Nuclear energy saw the steepest rise at 24 percent, followed by coal at 19 percent, and gas at 23 percent.

February’s average power generation cost stood at Rs8.7 per kilowatt-hour (KWh), up from Rs8 per KWh a year earlier, marking a 9 percent year-on-year increase.

"During February 2024, the actual power generation was 14.6 percent lower than the reference generation. This decline in generation is expected to result in higher capacity charges for the fourth quarter of this fiscal's QTA,” said Tahir Abbas, Head of Research at Arif Habib Limited.

On a monthly basis, the cost of power generation decreased by 37 percent, as compared to an average cost of Rs13.8 in January this financial year. The power generation in the country clocked in at 7,117 GWh in February 2024, which is 8 percent lower compared to the same period last year when it stood at 7,756 GWh.

The year-on-year decrease in power generation is attributed to a decline in power generation from hydel and nuclear, which stood at 1,766 GWh and 1,660 GWh during February 2024, down by 14 percent and 12 percent year-on-year, respectively.

On a monthly basis, power generation decreased by 14 percent, as compared to 8,313 GWh registered in January this financial year.

During the first eight months of the current financial year, the power generation decreased by 1 percent year-on-year to 84,317 GWh, compared to 84,841 GWh during the same period of last year.

During the month of February, hydel topped the total power generation of the country as its share stood at 24.8 percent of the power generation. The nuclear power generation accounted for 23.3 percent of the overall generation, followed by RLNG which accounted for 20.4 percent of the power generation share.

Among renewables, wind, solar, and bagasse generation amounted to 1.5 percent, 1.3 percent, and 1.4 percent of the generation, respectively. In the eight months of this fiscal, hydel contributed 29.4 percent to the power generation followed by nuclear and RLNG sources with 19.7 percent and 14.7 percent respectively.