Irfan Khan
Irfan Khan

KARACHI: The cost of fuel for electricity generation in December 2021 surged 72.4 per cent year-on-year to Rs8.24 per unit, according to data released by the National Electric Power Regulatory Authority.

The increase in the fuel cost, which is one of the three components of the final rate that power producers charge their government-backed buyer, was 30.4pc on a month-on-month basis.

The steep increase was because of a jump in furnace oil (FO) and regasified liquefied natural gas (RLNG)–based cost of power generation, according to Tahir Abbas, head of research at Arif Habib Ltd.

The two sources of fuel collectively contributed about 18pc to the fuel mix in December.

Highest-ever power generation recorded in 2021

Total power generation stood at 8,828 gigawatt hour last month, up 12pc and 4.1pc on annual and monthly bases, respectively.

According to Pak-Kuwait Investment Company Head of Research Samiullah Tariq, the 12pc increase in power generation is reflective of “strong economic activity”. He noted that electricity produced on high-speed diesel (HSD) was cheaper than that on RLNG, which “validates [the] government’s stance” with respect to the cost-effectiveness of HSD amidst rising gas prices.

The per-unit fuel cost of HSD was Rs14.1 in December versus Rs17.8 of RLNG, data showed.

Ministry of Energy spokesperson Muzzammil Aslam said consumers are getting higher electricity bills for the last two months because of the fuel surcharge component.

The PML-N government set up power plants that run on imported fuels whose prices have skyrocketed over the last year, he added.

The largest contributor to the power mix in December was coal (23.8pc), although its share came down 5.3 percentage points from a year ago. Hydel was the second largest contributor to the power mix with a share of 20pc, down 2.7 percentage points from December 2020.

Nuclear power witnessed the highest year-on-year jump (109pc) in terms of units generated in December following the commissioning of a 1,100MW power plant in May.

The country recorded its highest-ever power generation of 136,572GWh in the last calendar year, up 10.6pc from 2020. As for the last fiscal year, electricity generation went up 7pc while the economy grew 5.4pc, said Fahad Rauf, head of research at Ismail Iqbal Securities.

Using the power production trend as a proxy for economic expansion, Mr Rauf said GDP growth of 4-5pc “seems likely” in 2021-22.

Published in Dawn, January 22nd, 2022



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