KARACHI: The cost of fuel for electricity generation in February went down 28.5 per cent to Rs8.01 per unit from a month ago, according to data recently released by the National Electric Power Regulatory Authority. The drop in the fuel cost was 10.3 per cent on a year-on-year basis.

According to Tahir Abbas, head of research at Arif Habib Ltd, the drop was triggered by a 39.2pc annual increase in hydel-based power generation, which requires zero fuel. The share of hydel in the power generation mix rose to 26.5pc in February from 9.4pc a month ago and 18.2pc a year ago.

In addition, relatively cheap nuclear-based electricity generation was up 86pc year-on-year, denting the overall cost of fuel. The share of nuclear power increased to 24.3pc in February from 22pc in the preceding month and 12.5pc in February 2022. The fuel cost for nuclear power generation is only Rs1.07 per unit, lowest of all sources except renewables.

The coal-based cost of generation decreased 4pc year-on-year owing to the addition of local coal-based plants. The per-unit cost of coal-generated power decreased 21.7pc to Rs12.57 from the preceding month.

China Power Hub Generation and Thar Energy Ltd produced no electricity during February owing to the problems relating to coal imports and transmission constraints caused by a delay in the second transmission line between Thar and Matiari Converter Station, said Mr Abbas.

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 fourth largest at 14.1pc versus 28.7pc in January.

Solar-based power generation went up 41.1pc from a year ago while furnace oil-based generation declined 79.5pc, which cumulatively reduced the fuel cost per unit.

The average cost of re-gasified liquefied natural gas (RLNG) increased 6.6pc on a monthly basis to Rs23.36 a unit. Its share in the pie of electricity rose to 18.9pc in February from 15.1pc a month before.

One of the three components of the final rate that power producers charge their sole government-backed buyer, the average fuel cost for the first eight months of 2022-23 went up 18.6pc year-on-year to Rs9.24 per unit.

Total power generation dropped 8.9pc month-on-month to 7,756 GWh in February. On a yearly basis, power generation dropped 4.1pc.

The drop in power generation in the first eight months of the current fiscal year was 7.1pc to 84,840 mainly because of the overall decline in economic activity across the country, said Mr Abbas.

Published in Dawn, March 23rd, 2023