Pakistan was recipient of close to a billion-dollar worth of loans from the likes of Asian Development Bank and other donors in the past three years – on energy reform projects alone. The most prominent program was ADB’s Energy Sector Reforms and Financial sustainability Program – in two parts. The much talked about Circular Debt Management Plan has also been at the heart of all energy related “reforms” in the recent past.

Not sure if much has changed in the sector, in fact things have taken a turn for the worse. Minus the usual revenue-driven measures aimed at rationalizing energy tariffs, all else has fallen flat. The regulator’s most-recent State of the Industry Report once again offers the yearly reminder of how ill the sector is. Amongst many shortcomings, let’s just talk about the fuel supply management and the ill-conceived load management plan, which haunts the sector like none other.

While T&D losses and low collection hog most of the highlights, and rightly so, they are not the only bits of inefficiencies that plague the system. FY22 saw the highest yearly Part Load Adjustment Charges (PLAC) at Rs42 billion. Recall that most Power Purchase Agreements allow claims in lieu of PLAC when the system operator runs thermal plants on part load.

Pakistan has some of the most efficient power engines on RLNG, but they hardly ever achieve that. Running plants on part load, mostly because of the distribution losses and collection-based load shedding means the part load claims rise, despite enough power demand in the system, and efficiency loss for power plants. All this eventually feeds into the final fuel price component.

The utilization factor of some of the big thermal plants remained close to 40 percent, as against an availability factor of gas-based power plants around the world is over 92 percent. Furthermore, the continuous operation of Combined Cycle Power Plants (CCPP) in open cycle keeps the consumer end tariff higher. Under usual circumstances, open cycle generation is 50 percent more expensive. The issue at Guddu power plant alone despite dedicated cheap gas allocation, led to a marginal cost of no less than Rs55 billion.

The utilization factor Take or Pay thermal power plants in FY22 stayed at a very low 46 percent. This essentially means the capacity charges of the remaining half has to be paid by consumers. The need is to have an optimum mix of Take or Pay and Take and Pay to mitigate uncontrollable factors, which often lead to lower than desired utilization of plants, most of which have Take or Pay clauses.