Karachi, March 22, 2022 (PPI-OT): Pakistan Power: Generation experiences seasonal dip
CPPA-G released the data for Feb’22, in which power generation increased 11.1% YoY to 8,088GWh, but declined by 8.1% MoM due to lower number of working days, with Feb historically being the month of lowest power generation in the year. Total power generation for 8MFY22 is up 9.5% YoY to 91,257GWh, with the biggest increase seen in HSD power generation, followed by FO and Nuclear.
Average cost of generation decreased to PkR9.2/kWh from the historic high experienced last month of PkR12.6/KWh due to recovery of Hydel Power Plants in the generation mix, with costly sources of HSD and RFO consequently contributing lesser.
Lucky Electric Power has commenced operation with 660MW and a further ~3000MW capacity in new power plants is expected to commence operations in the coming year. Due to this, Pakistan’s nameplate capacity is likely to cross 39,645MW while its current capacity utilization is 31.4%, down from 34.2% posted in Jan’22.
According to latest data, Pakistan’s circular debt stands at PkR2.4trn with monthly debt flow amounting to PkR38bn. The subsidy of PkR5/unit announced in the relief package is expected to worsen the circular debt situation unless the Government ensures timely payment of the total subsidy amounting to PkR136bn.
Power Generation data for Feb’22: The power generation in Feb’22 increased 11.1% YoY to 8,088GWh, but declined by 8.1% MoM with Feb historically being the month with least power generated throughout the year.
Hydel share has increased to 18.2% during the month from 5.8% in Jan’22 as power plants underwent scheduled maintenance in the previous month with consequent decline in HSD and FO usage — their share dropping to 0% and 6.5% in Feb’22 from 6.7% and 14.1% in Jan’22, respectively.
Consequently, avg. cost of generation declined to PkR9.2/kWh in Feb’22 from PkR12.6/kWh in the previous month. Total power generation for 8MFY22 is up 9.5% YoY to 91,257GWh, with the biggest increase seen in HSD power generation, up 215% YoY, followed by FO and Nuclear with 99.1%/94.4% YoY increase in generation.
To highlight, Chinese- built 1100MW Karachi Nuclear Power Plant Unit-2 came online in May’21, the impact of which is visible in current year’s power generation. Investment perspective: Lucky Electric Power, based on coal, has commenced operation with a capacity of 660MW which together with additional ~3000MW capacity that are yet to come online, is likely to take Pakistan’s net nameplate power capacity to 39,645MW.
However, utilization still remains inadequate where at current levels it stands at 31.4% and further additions along with surge in fuel costs are likely to contribute to ballooning circular debt. As per latest news reports, monthly circular debt flow has reached to PkR38bn while cumulatively it stands at PkR2.4trn.
Further, the Govt. has announced a relief package of PkR5/unit for consumption of up to 700 units, entailing a subsidy of PkR136bn, delays in the release of which would further add to liquidity woes across the chain. Hence, investment case of the power sector only rests with li- quidity injections by the Govt. to the IPPs