Power generation falls 2.7 percent in January

KARACHI: Power generation fell 2.7 percent year-on-year to 7,764 gigawatt hours (GWh) in January as electricity production from ex-furnace oil sources continued to decline during the month, a brokerage reported on Tuesday.

Power production from furnace oil surged six percent to 1,722 GWh, analyst Rao Aamir Ali at Arif Habib Limited said. In January, share of furnace oil soared to 22.2 percent from 20.4 percent in the corresponding month a year earlier.

The increase in furnace oil (FO) production was contrary to the government’s plan to shed reliance on furnace oil for electricity generation that is relatively more expensive. Oil is a big ticket import for Pakistan whose oil import constitutes almost a quarter of the country’s $60 billion annual import bill.

Average cost of generation on furnace oil remained Rs13.9/kilowatt-hour (kWh) in January, a 34 percent higher from the corresponding month a year earlier. Generally, electricity fuel cost surged 20 percent – four-year high – to Rs7.3/kWh.

“The rise in FO-based cost is backed by 20 percent rise in average FO prices,” Ali said. “We also highlight that FO has the highest weight in total cost rise; 78 percent (Rs0.96/kWh) rise in fuel cost has been contributed by FO-based generation,” Ali added.

Hydropower decreased 21 percent to 478 gigawatt hours (GWh) in January, while its share fell to 6.2 percent from 7.6 percent. Gas-based electricity production dipped eight percent to 1,709 GWh. Re-gasified liquefied natural gas- (RLNG) based power generation declined 29 percent to 1,138 GWh. Share of RLNG declined to 15 percent from 20 percent. Cost of RLNG-based generation, however, increased 14 percent to Rs10.6/kWh.

Solar-based generation also declined 21 percent to 43 GWh. Coal-based cost of generation also increased 31 percent to Rs6.8/kWh. Coal contributed 43 percent (Rs0.53/kWh) in total fuel cost rise during the month under review.

The country produced 12 GWh from diesel power plants in January as compared to zero in the corresponding month a year earlier. Cost of diesel-based generation is the highest among all the available sources of generation.

In January, share of nuclear fell to 11.7 percent from 10.3 percent in the corresponding month a year earlier, while share of wind power dropped to two percent from 0.9 percent.

The analyst further said the decline in generation was witnessed due to 18, eight and 33 percent decline in generation of Engro Powergen, Foundation Power and Habibullah, respectively. Fauji Kabirwala and Altern generated zero electricity in January. Generation of Uch-II, however, increased two percent.

Power generation increased four percent during the seven months of the current fiscal year of 2018/19.