High tariffs push down power demand

Published July 23, 2024
The Kot Addu Power Company’s plant in Punjab’s Muzaffargarh district. With a power generation capacity of 1,336MW, the plant was removed from the system after the expiry of the power purchase agreement.—Dawn/file
The Kot Addu Power Company’s plant in Punjab’s Muzaffargarh district. With a power generation capacity of 1,336MW, the plant was removed from the system after the expiry of the power purchase agreement.—Dawn/file

KARACHI: The country’s power generation fell by 2 per cent to 127,259GWh (14,504MW) year-on-year during FY24 owing to a slowdown in overall economic activity and lower demand amid rising power tariffs.

Hydel contributed the most to power generation (31pc in FY24 versus 28pc in FY23), followed by RLNG (19pc in FY24 versus 17pc in FY23) and coal (16pc in FY24 versus 16pc in FY23) based power generation. Nuclear, gas, wind, and furnace oil-based generation contributed 18pc, 9pc, 3pc, and 2pc to the country’s power generation in FY24.

In absolute terms, hydel and RLNG contributed the most to additional power generation. However, power generation from gas and furnace oil declined.

According to a report by Topline Securities, the three new solar-based power additions to the system include Helios Power (50MW), Meridian Energy (50MW), and HNDS Energy (50MW).

However, Kot Addu Power Company Ltd (Kapco), with a power generation capacity of 1,336MW, was removed from the system after the expiry of the power purchase agreement.

This takes the total installed capacity to 40,281MW in FY24 compared to 41,460MW in FY23, the report said, adding that the average fuel generation cost was down by 6pc year-on-year to Rs8.8/kWh in FY24 from Rs9.3/kWh in FY23, the report said.

During June 2024, fuel cost declined by 11pc year-on-year and 2pc month-on-month to Rs8.6/unit. Around 45pc of Pakistan’s power generation is from RLNG, coal, and gas with an average fuel cost of Rs17/unit in FY24.

Separately, the cost of generation using coal has declined by 13pc year-on-year to Rs12.9/KWh due to a fall in

international coal prices. Similarly, RLNG cost on per KWh basis has also plunged by 2pc due to drops in the international crude oil prices by 2pc to $80 per barrel in FY24.

The Topline Securities report said that for the past two consecutive years, i.e., FY23 and FY24, power generation

has shown negative growth of 9pc and 2pc, respectively. However, with improvements in economic activity, lower interest rates, and stable currency devaluation, demand for power to recover gradually.

Published in Dawn, July 23rd, 2024

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