AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

The worst fears are coming true. When the electricity tariff rebasing exercise was carried out in July 2023, it was feared it would have a telling impact on demand. It took a couple of months for the effect to kick in. Electricity generation for two months running has now dipped 10 percent year-on-year. On year-to-date basis, total generation for Jul-Nov 2023 is up only 1.6 percent. Mind you, this is coming at the back of an abysmal FY23 – where monthly generation stayed negative for 13 straight months.For context, power generation in November five years ago in 2018 was higher than the 7.28 billion units in November 2023.

The heat is being felt across consumer categories, as expected. All Pakistan Textile Manufacturers Association (APTMA) for instance, has reported a 37 percent year-on-year fall in grid electricity consumption for October 2023. Granted, the actual power consumption would not have fallen by as much, as captive generation is believed to be rising.

What is most worrying is the continued sharp rise in fuel charges component in the last two months. November 2023 FCA adjustment sought at Rs4.66 is the highest in 16 months. Bulk of the FCC adjustment for October and November pertains to the authority’s decision on account of energy charges for Thar Coal Block-1 (TCB-1) power generation company. The post COD energy charges have been revised upwards – by up to three times over the previous reference tariff component of June 2016. The variable and fixed fuel cost component for TCB-1 for six months from February 2023 to July 2023 has been revised upwards from Rs3.49/unit to nearly Rs10/unit.

A little over Rs36 billion have been sought in lieu of previous adjustment in the last two FCA petitions – contributing significantly to the deviation from monthly reference fuel charges. The adjustments will keep coming for many more months and will likely keep FCA elevated, regardless of improvement in generation fuel mix and decline in international commodity prices. Of Rs68 billion in fuel charges for November 2023, Rs11 billion (Oct 2023: Rs25 bn) are on account of previous adjustment on TCB-1 revised reference fixed and variable cost components.

More expensive LNG is lined up for winters and should RLNG based generation share remain near the historic share for December and January – more sharp upward adjustment is in store. Quarterly adjustments also continue to be on the higher side, as demand dwindles. For the quarter beginning January 2024, another Rs1.15/unit will be added on top of Rs3.28/unit already in the field till March 2024. No wonder the circular debt flow has not been stemmed and is far from the ceiling allowed by the IMF on power arrear buildup. It won’t be smooth sailing at the second review of the ongoing IMF SBA – as the end-December target has been missed by a mile.

Comments

Comments are closed.

Ayesha Siddiqui Dec 27, 2023 02:32pm
Great read
thumb_up Recommended (0)
Aam Aadmi Dec 27, 2023 03:48pm
Not just power generation. Those at the helm of affairs in the power sector, rather those in power in this country are a big, big headache. No riddance in sight.
thumb_up Recommended (0)