Growth in electricity supply lags capacity additions

Generation cost for 5MCY11 at PKR6.72/kwh, up 6% YoY: Monthly generation data released by NEPRA suggests that average generation cost for 5MCY11 stood at PKR6.72/kwh, up 6% YoY. The rise was well contained in view of 15% higher FO prices, primarily on the back of higher share of hydel power, reduction in utilization of Gencos and decreased hydel generation cost. Average utilization of the system dropped by 5pp YoY to 51%, as all sources of power, except hydel, witnessed YoY decline in utilization.

Generation mix skewed towards cheaper fuels: Electricity supplies increased by 5% YoY, driven mainly by higher hydel generation sharing 28% of the pie (last year: 22%). Generation (gwh) on RFO and gas decreased by 0.3% YoY and 6% YoY, due to high FO prices during 1HCY11 and low availability of gas.

Major capacity additions during 1HCY11; mainly IPPs: Dependable capacity of the system increased by 6% during 1HCY11, of which 85% of the additions were done by IPPs, where 82% of the IPPs were thermal generation units.

Generation cost for 5MCY11 at PKR6.72/kwh, up 6% YoY

Monthly generation data released by NEPRA reveals that average fuel component of generation cost for 5MCY11 stood at PKR6.72/kwh, up 6% YoY. The increase in fuel cost component was mainly driven by increase in FO prices, as average FO prices during 1HCY11 increased by 15% YoY. However, overall increase in electricity generation cost was well contained due to shift in generation mix towards Hydel plants and IPPs, coupled with lower generation from Gencos. Further support came from 13% YoY decline in generation cost of hydel power. Average utilization of the system dropped by 5pp to 51% during 5MCY11. All power generation sources witnessed a decline in utilization levels except for WAPDA’s hydel plants, utilization of which increased by 9pp to 40% during 5MCY11. Lower utilization of electricity producers, despite addition of capacities, indicate that bulk of the electricity shortfall is either contributed by financial constraints or driven by the intent to keep generation cost low.

Generation mix skewed towards cheaper sources

Total generation increased by 5% YoY, mainly driven by increase in generation from Hydel plants during 5MCY11, up 28% YoY. Generation on RFO remained largely unchanged (-0.3% YoY) whereas that on gas dropped by 6% YoY due to lower availability of gas supplies to power sector. Decline in electricity generation on RFO and Gas paralleled a 34% and 48% increase in their respective installed capacity during the period.

New capacity additions during 1HCY11; mainly IPPs

System’s dependable capacity increased by 6% during 1HCY11 and 85% of the newly added capacities were IPPs. The system added 606MW of RFO based IPPs and 847MW of gas based units. As per PPIB, No IPPs are expected to be added in the system during remainder 2011 and 2012, and increasing demand suggests further worsening of the power shortfall going forward.

Economic & Political News

Forex reserves scale new high of USD18.3bn

Pakistan’s foreign exchange reserves raced to new high of USD18.303bn by week ended July 23 after an increase of USD28mn, the State Bank of Pakistan (SBP) said on Thursday

Restoration of Establishment Division secretary; SC gives government one more day

The Supreme Court on Thursday rejected the prime minister’s request for more time to submit a reply over reinstatement of Sohail Ahmad as the Establishment secretary and directed Attorney General of Pakistan (AGP) Maulvi Anwarul Haq to present prime minister’s written reaction on the matter today.
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