Electricity generation up 9pc in Sept

KARACHI: Total power generation during September 2019 incremented 9.0 percent to 13,621Gwh against 12,552Gwh generated during the same month last year, latest data released by the National Electric Power Regulatory Authority (NEPRA) suggests.

The government plans to increase the country’s power generation capacity by almost 300 percent in next 20 years to 111,000MW and phase out almost all of the existing thermal power plants to meet rising energy demand at affordable costs.

Within the power generation mix, coal and hydel exhibited notable increase of 94 percent and 18 percent to 2,232Gwh and 5,053Gwh, respectively during September; whereas furnace oil (FO) and gas-based generation declined 20 percent and 18 percent to 817Gwh and 1,615Gwh during the month.

Pakistan’s current total capacity stands at about 354,000MW including about 3,000MW of coal-based plants, 9,700MW of hydropower plants, 20,000MW of thermal plants besides 1,345MW of nuclear and 1,900MW of renewables.

On a cumulative basis, total power generation for the country during Q1FY20 (July-September FY19) arrived at 41,904Gwh, depicting an increase of 4.0 percent.

“The slender rise in power generation has been led by higher coal and hydel-based generation, thereby improving their share in the country’s total power generation mix to 15 percent and 37 percent during Q1FY20 up from 10 percent and 31 percent during the same period last year,” a report issued by Pearl Securities noted.

As expected, FO-based generation during September witnessed a hefty decline of 20 percent owing to shift towards other sources, which are significantly cheaper than FO based power producers. Consequently, RFO-based generation during Q1FY20 slumped 47 percent to 2,106Gwh.

Coal-based power generation rose by a mammoth 94 percent during September. “Cumulatively during Q1FY20, notable rise of 45 percent was witnessed in coal-based generation, thereby highlighting government’s resolve to increase reliance towards low-cost power generation sources,” a brokerage house report said.

Hydropower generation improved 18 percent during September. However, on sequential basis, it was down 11 percent. During Q1FY20, hydropower generation recorded double-digit growth of 21 percent.

Cost of generation during September for coal declined 17 percent to Rs5.38/Kwh whereas generation cost from gas, RLNG and RFO increased 45 percent, 12 percent and 6.0 percent to Rs7.03/Kwh, Rs11.12/Kwh and Rs16.56/Kwh, respectively.

Share of hydel in the overall generation mix increased to 37 percent, while share of coal increased to 16 percent during September.

However, share of FO, gas and RLNG declined to 6.0 percent, 12 percent and 21 percent respectively in the country’s overall generation mix.

Going forward, analysts anticipate power generation to gradually subside over the coming months owing to seasonal factors. “Moreover, with government’s aim to phase out inefficient generation companies, curtail generation from higher cost FO plants and consequently increase reliance on cheaper sources of generation, we estimate share of coal and LNG to further rise in the country’s overall generation mix.”

With the government unable to execute issuance of Rs200 billion Pakistan Energy Sukuk-II owing to IMF’s restriction on extending sovereign guarantees, the persistent delay in resolution of circular debt continues to exacerbate liquidity issues for the sector and hence has forced power producers to meet their financing requirements through high cost debt financing.