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June 25, 2019

Power generation up 4 percent in May

Business

June 25, 2019

KARACHI: Total electricity generation during May 2019 registered 4.0 percent YoY increase to 12,604Gwh against 12,118Gwh in the corresponding month of last year, as per latest data released by National Electric Power Regulatory Authority (NEPRA).

“Rise in power generation during the month is primarily attributed to notable improvement in Hydel and RLNG-based generation, which exhibited a hefty increase of 69 percent YoY and 25 percent YoY, respectively during May 2019. However as expected, power generation through furnace oil (FO) declined significantly (83 percent YoY) during the month,” an analyst at Pearl Securities said. On a cumulative basis, total power generation for the country during 11MFY19 (July-May 2018-19) clocked in at 109,553Gwh, depicting an increase of 2.0 percent. “The slender rise in power generation has been led by higher RLNG/coal-based generation (39 percent /62 percent), thereby improving their share in the country’s aggregate power mix to 13 percent/22 percent during 11MFY19 compared to 10 percent/13 percent in the corresponding period last year.”

As expected, RFO-based generation in May 2019 witnessed a hefty decline of 83 percent YoY to only 398Gwh owing to change in government’s policy and shift towards other sources of power generation (coal and RLNG) which were significantly cheaper than FO-based IPP's. Coal-based power generation incremented 11 percent YoY to 1,629Gwh in May 2019 compared to 1,469Gwh during the same month last year. Cumulatively in 11MFY19, notable rise of 39 percent YoY was witnessed, which indicates government’s resolve to increase reliance on low cost power generation.

Hydropower generation improved 69 percent YoY to 3,747Gwh in May 2019 whereas on a MoM basis, hydropower generation was 68 percent higher MoM. Moreover, during 11MFY19, the growth in hydel generation was 16 percent.

According to NEPRA, cost of generation in May 2019 for coal registered an increase of 5.0 percent YoY/-11 percent MoM to Rs6.04/Kwh whereas power cost from gas rose 24 percent YoY/-1.0 percent MoM to Rs6.01/Kwh. Cost for RFO based generation increased 7.0 percent YoY/ 8.0 percent MoM to Rs13.29/Kwh.

With regards to power generation mix in May 2019, share of hydropower increased to 30 percent (+12pps YoY) while that of RLNG arrived at 29 percent (+5pps YoY). RFO share in May 2019 plunged significantly to a meagre 3.0 percent (-15pps YoY) whereas share of gas and coal remained almost stagnant at 16 percent and 13 percent, respectively.

“Going forward, we anticipate power generation to remain higher owing to seasonal factors as demand continues to peak, with LNG and coal-based generation estimated to further increment their share in the country’s overall generation mix,” Pearl Securities report said.

With government eyeing another round of Rs200 billion payments through Pakistan Energy Sukuk-II in order to curtail the mammoth circular debt, analysts expect partial resolution of power sector receivables to not only improve liquidity position of producers but also room for further enhancement in power generation.

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