The worst is behind us. All high frequency data points are increasingly pointing out that much. After LSM numbers turning positive after long, electricity generation for September saw continuation of positive growth trend that started at the beginning of FY24. The quarterly electricity generation from the grid at 43 billion units is 7 percent higher year-on-year. For September 2023, power generation at 12.9 billion units was higher 3 percent year-on-year.

There is nothing exemplary about the growth – considering that it is coming off from last year’s low base. Mind you, the quarterly and monthly generation are both lower than the levels seen in 2019. There is obviously considerable slack in the economy – as industrial activity has been slow to rebound and sky-high consumer end tariffs are playing their part in curtailing demand, particularly from the domestic category.

The context of low base should not be lost at anybody here – but the trend reversal has surely started. It will be a while before the numbers are back to pre-Covid or even 2021 levels, especially as sharp upwards tariff adjustments have been too frequent. Demand management plans have not changed appreciably either. With the peak demand months now behind us –the next few months offer easier navigation for the system operators in terms of managing fuel supply and sticking to merit order of dispatch.

Hydel’ share at 38 percent in total generation is much in line with historic September average of 37.5 percent. That said, hydel’s total generation at 5 billion units is also reflective of lower rainfall and retention in dams – despite much increased available capacity after Tarbela Extension IV came online. The national mean temperature during September was warmer by 1.12 degrees centigrade – as per Pakistan’s Monthly Climate Summary prepared by the Pakistan Meteorological Depart-ment. There is a clear indication that domestic demand is being curtailed as consumers cut consumption in the wake of record high bills.

As winters approach, the generation mix will also be significantly altered with the fossil fuels shouldering much of the burden, as hydel’s share falls. Favorable currency movement in the last month or so is a welcome change in terms of monthly fuel tariff adjustments – especially as the reliance on imported gas and coal will increase in the coming months. The authorities would do well to ensure contribution from local coal based plants stays near optimal levels to keep the monthly FCAs under control.