Having gone down for 13 straight months – the national grid electricity generation finally had something to sow for. The recently released numbers for July 2023 power generation show a 4.5 percent year-on-year growth. Is this finally the start of trend reversal after more than a year? It could well be, but it remains tricky and little too soon to say just that.

Mind you, July 2023 generation net of auxiliary consumption at 14.3 billion units is still lower than July of 2021 and even 2020 – as Pakistan was still under some form of Covid restrictions. The July generation is only marginally higher than four years ago – and should not really be viewed as something to boast of, unless it becomes a pattern, and things start moving in double digits from hereon – just as they were prior to June 2021. The low base will surely help for much of FY24 – but expecting a major rebound, especially as prices have skyrocketed and more adjustments in line –would not be the wisest call.

The 12-month moving average power generation is marginally higher from a month ago – but is still lower 8 percent year-on-year. The clock is stuck at around four years ago – and there is possibly not much downside that remains. In these four years, the generation capacity has increased considerably, whereas the mix has changed for the better. But the lack of meaningful demand growth means the benefits have been limited – and if anything, the added capacity costs, without an increase in demand – have played havoc with the consumer end tariffs.

In terms of generation mix, hydel contributed the highest with 37 percent, much in line with seasonal trends. Hydel based generation at 5.5 billion units is the highest for any July and the second-highest for any month. Weather played a part as rainfall in July was 70 percent above July average, July being the 9th wettest month in Pakistan’s recorded history. But the real difference was the contribution from Tarbela Extension 4 – that finally materialized – constituting nearly 20 percent of all hydel generation.

With the peak generation months of August and September around – timely fuel availability will remain critical to system generation. So far this month, the system has been able to generate enough power without having to increase the existing load management duration. But with another round of substantial currency depreciation currently underway, more upward adjustments are in line – in addition to the recently adjusted base tariffs and pending periodic adjustments. With concessional tariffs for industrial and agriculture users now abolished – the demand growth going bac to the FY21 trajectory seems highly improbable.