Electricity production hits 33-month low

KARACHI:

Pakistan’s electricity production plummeted to a 33-month low, reaching 7,547 Gigawatt-hours (GWh) in November 2023. This decline was partly attributed to the onset of the winter season and, more significantly, the overall economic slowdown in the country. The decline in electricity generation has intensified the burden of capacity payments on end consumers.

The cost of fuel in power generation rose by nearly 20% to Rs 7.17 per megawatt hour (MW). Several factors contributed to this increase, including the closing of a nuclear power plant, a doubling of the cost of local coal-fired power generation, and a significant increase in natural gas tariffs for domestic gas. Moreover, the price of imported natural gas (RLNG) showed a marked increase during the month under review.

JS Research highlighted in an infographic that “electricity production is at a 33-month low (in November 2023).”

Speaking to The Express Tribune, Tahir Abbas, Head of Research at Arif Habib Limited, said two major developments have led to an increase in fuel costs for power generation. The shutdown of the Kanupp-2 nuclear power plant, with an installed generating capacity of 1,100 MW, for an annual turnaround (ATA) played a decisive role. At the same time, the arrival of China’s Shanghai Power Electric (SPE) 1,320 MW Thar coal power plant in the same month, which had not been operational since November last year, contributed to the increased costs.

Abbas said electricity production fell 10 percent to 7,547 GWh in November compared to the same month last year. In addition, there was a 21% decrease in production compared to the previous month of October 2023.

He attributed the drop to the early start of this year’s winter season and the general economic slowdown, resulting in a reduction in electricity consumption. Economic activities, mainly industrial and commercial, account for about 60% of total electricity generation in Pakistan, with households using the remaining 40%.

Reading Power outages, water and gas shortages sparked protests

Despite the drop in November, Abbas pointed out that total electricity generation in the first five months of the current financial year (2023-24) increased by 1.8% to 61,258 GWh compared to the same period last year. This suggests that energy production and economic activities are in a state of stabilization, with expectations of a revival from early 2024. He pointed out that the country produced 798 GWh from RLNG despite a significant increase in its price at the beginning of the winter season. This output was necessary for the operation of the national electricity transmission grid.

Actual output in November 2023 was 16% lower than baseline output. Abbas noted, “The reduction in production will increase capacity charges for the second quarter (October-December) of the current financial year 2023-24.”

Hydel power generation rose 11% in November compared to the same month last year. However, nuclear generation fell 33% year-on-year, while local coal generation rose 95%. RLNG and local natural gas production fell by 21% and 41.5%, respectively, and furnace oil production fell by 97% in November compared to the same month last year.

Regarding fuel costs, Abbas reported a 19.7% increase in electricity generation costs in November compared to the same month last year. The average fuel cost for power generation increased to Rs 7.17/KWh compared to Rs 5.99/KWh in November 2022. The increase is mainly due to the decline in nuclear, wind and solar power generation.

Published in The Express Tribune, December 21^St2023.

Like Businesses on Facebook, follow @TribuneBiz on Twitter to stay updated and join the conversation.