Daily Times

KARACHI: Power generation in the country has increased by 5.7 percent in the first quarter of current fiscal year (1QFY17) to 32.81GwH (Gigawatt hours), electricity was supplied to the national grid, amounting to a dependable capacity of 14,861 MW, up by 6.7 percent YoY.

According to the available data during month of September 2016 electricity generation stood at 10.22GwH, up by 6.2 percent YoY. With the generation uptrend the dependable capacity now operates at 66 percent of total nameplate capacity (22,400MW), where the rise in both nameplate capacity (1,008MW in capacity added since 1QFY15) and net dependable capacity in assuring.

“Improvements at DISCO level operations continues to factor into improving debt dynamics, particularly, PEPCO figures point to a system wide increase in recoveries to 94.2 percent in FY16 as compared to 89.2 percent in FY15, 25 percent average reduction in weighted average tariff (currently at Rs11.9/KwH) due to fuel adjustments, averaging Rs 3/KwH, and completion of second fiscal year of no federal budget subsidy for circular debt build ups, with only approximately Rs 8 billion added to arrears from the sector against approximately Rs 118 billion added in FY15”, said report by AKD Securities.

During the period the use of gas for power generation increased by 29 percent for 5MFY16 from 24 percent for 5MFY15, thus depending less on furnace oil FO for power generation. The cost of thermal sourced power generation continuously declining, led by FO, Rs8.0/KwH down by 18 percent YoY, and HSD, Rs 12.2/KwH, drops by 17 percent YoY.

During the period the number of regulatory steps were taken including finalization of consumer end tariff regimes for DISCOs along the lines of the recently concluded MYT arrangement with KEL, Sept 2016 marked the cessation of period under which petitioners could request tariffs under the Upfront tariff of imported/local coal, modification of terms under which NTDC sets wheeling charges and headway on allocation of its tariff and approval for two public sector plants on RLNG (Balloki & Haveli Bahadar Shah) having 2,453MW of cumulative capacity. “On a broader note, news flow regarding curtailment of NEPRA’s authority by the GoP, giving more room for the MoWP to assert control needs to be closely monitored and implemented in a fair manner”, the report added.

Moreover, cessation of the upfront tariff only formalizes a policy, NEPRA had enacted long before, where difficulties many petitioners have in getting tariffs approved (LUCK, HUBC, KEL) hampered progress on an otherwise ‘ambitious’ generation plan. Policy deviations remain a major hurdle for companies in the sector, as they hamper growth opportunities, HUBC considering reducing size of China Hub Power venture, and raise risks for attracting long term, foreign investors (contentions over approvals for KEL stake sale, CMEC in 330MW Salt range coal), the AKD Securities report observed.