KARACHI: The cost of fuel for electricity generation in January went up 59 per cent to Rs11.20 per unit from a month ago, according to data recently released by the National Electric Power Regulatory Authority.

The rise in the fuel cost was triggered by a decline in hydel- and nuclear-based power generation, according to Tahir Abbas, head of research at Arif Habib Ltd.

The share of hydel in the power generation mix slid to 9.4pc in January from 20.4pc in December. The drop in the contribution of hydel led to the spike in the overall average cost since electricity obtained from dams carries zero fuel cost.

Similarly, the share of nuclear power dropped to 22pc in January from 27.1pc in the preceding month. The fuel cost for nuclear power generation is only Rs1.07 per unit, lowest of all sources except renewables.

The per-unit cost of coal-generated power increased to Rs16.05 per unit in January, up 39.6pc from the preceding month. Thar coal isn’t benchmarked to the international prices and is, therefore, significantly cheaper than its imported counterpart.

However, Pakistan still burns imported coal to produce electricity partly because of limited supplies from the Thar fields. The share of coal in the power mix last month was the largest at 28.7pc versus 18.1pc in December.

The average cost of re-gasified liquefied natural gas (RLNG) increased 8.4pc on a monthly basis to Rs21.91 a unit, which contributed to the overall cost of fuel for electricity generation in January.

Published in Dawn, February 21st, 2023