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April 23, 2019

Power generation rises to 87,232GWh in 9 months

Business

April 23, 2019

KARACHI: Power generation slightly rose two percent to 87,232 gigawatt hours (GWh) in the first nine months of the current fiscal year of 2018/19 as RLNG- and coal-based electricity production increased during the period, brokerages reported on Monday.

Pearl Securities said regasified natural gas- (RLNG) and coal-based power generation increased 87 and 57 percent, respectively, in the July-March FY2019. In July-March, their cumulative share in the country’s power mix rose to 34 percent from 20 percent in the corresponding period a year earlier.

RFO emerged as the single most expensive source of power generation in 9MFY2019, averaging at Rs14.11/kilowatt-hour (kWh), up 44 percent year-on-year. Hydropower generation grew eight percent in the nine months period.

In March, power generation fell 13 percent year-on-year to 7,621 GWh, but it rose 14 percent month-on-month. “Lower power generation during the month was primarily due to decline in RFO (residual fuel oil) and RLNG-based generation, which plummeted 97 percent and 16 percent year-on-year to 40GWh and 1,784GWh, respectively in March,” Pearl Securities said in a report.

In March, RFO-based generation declined 97 percent year-on-year to 40GWh owing to change in government’s policy towards other sources – coal and RLNG – which are relatively cheaper and more efficient than furnace oil-based independent power producers.

“However, FO-based generation could see improvement in the coming months, with the government’s recent decision to allow import of FO to meet base-load demand,” analyst Ali Zaidi at JS Global Capital said. In March, coal-based power generation decreased 15 percent year-on-year to 1,069GWh. Hydropower generation increased 84 percent year-on-year and five percent month-on-month to 1,601GWh in March as heavy rainfall across the country restored water level in the reservoirs.

While overall cost of generation in March was down 19 percent year-on-year to Rs5/kWh, it marginally increased by two percent from the previous month. RFO was among the most expensive fuel sources at Rs11.36/kWh. Coal-based generation costs 6.97/kWh in March. Despite a 21 percent increase, gas was among the more economical sources in March at a cost of Rs5.76/kWh. Each kWh generated using RLNG cost Rs9.85, reflecting an 11 percent increase year-on-year.

In March, share of hydropower increased to 21 percent, up 11 percentage points year-on-year, while that of gas rose three percentage points to 24 percent. RFO’s share plunged to a meagre one percent, whereas share of RLNG and coal remained almost stagnant at 23 percent and 14 percent, respectively.

Analysts expect power generation from RFO-based plants to depict slender increase as petroleum division recently sought approval for import of 350,000 tons of furnace oil to meet higher demand in the upcoming months. RLNG-based generation is also expected to increase due to rise in LNG imports. RFO-based generation will continue to dwindle in the long run, as new LNG/coal-based power plants become operational and hydropower generation increased owing to government’s focus on improvement/addition of water reservoirs.

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