Power generation in May-19 jumps while its cost slides

June 24, 2019 (MLN): The Central Power Purchasing Agency Guarantee Limited (CPPA-G) has proposed an increase of Rs.0.215/kWh over the reference fuel charge i.e. Rs.5.0457/kWh for the month of May 2019.

According to a notice published by National Electric Power Regulatory Authority (NEPRA), a hearing to consider the proposed adjustment will be arranged at 11:00 am on June 26, 2019 (Wednesday) in Islamabad.

Endowed with extremely hot summers, May 2019 observed a 4% year-on-year increase in power generation due to soaring demand for electricity. Power generation during the month clocked in at 12,603.56 Gwh against last year’s figure of 12,118 Gwh. Generation from Residual Fuel Oil (RFO) (398 Gwh) dropped by 83% YoY, while that from hydel (3,747 Gwh) and RLNG (3,625 Gwh) rose by 69% and 25% respectively.

On the other hand, the average cost of generation (Rs.5.26/kWh) came down by 16% YoY, “primarily due to higher contribution by hydel generation to the generation mix as well as decline in RFO-based generation,” as pointed out by analysts at BIPL Securities in their research note.

They further explained that the USD/PKR depreciation resulted in increased cost of RFO, coal and RLNG-based generation by 7% YoY, 5% YoY and 5% YoY, respectively. “Cost of gas based generation also increased by 24% YoY as a result of the upward revision in gas tariffs.”

Ali H. Zaidi for JS Global Capital Limited added that, “Given the rising popularity of renewable energy and the recent rains that increased Hydel generation, the fuel component of the cost of power generation was bound to fall.”

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