The PM has now instructed the Power Division to prepare a plan either to offer golden handshake packages to these companies’ employees or to absorb them elsewhere not realizing that NEPRA and IGCEP are in conflict on their retirement with later planning for their shutdown not before 2030.
Will this actually happen including decision to shutdown Pakistan Public Works Department which is managing development projects across the country valued at approximately Rs. 60 billion. Originally founded in 1854, it was renamed after Independence to the Pakistan Public Works Department and other departments as stated by the PM?
This is a test case for ability and intent
Pakistan Development Fund has invested in National Parks Management Company and has established Balloki and Haveli Bahadur Shah (2453 MWs of LNG based power Plants which should be shifted to GENCOs and PDFL be given ownership of developing SEZs, BOI be shutdown and its role given to MoFA.
Surprisingly, NEPRA has not emphasized similar urgency of retiring KE older plants (Total installed MW capacity in 2019 of 2797 was 3523 in 2023 and dependable is 3121) to alleviate the financial strain on the power sector and optimize the allocation of precious fuel to the most efficient power plants.
Its own MWs installed capacity (2019 of 2294 was 2816 in 2023; Dependable is 2594) cost of generation being high: (i) Bin Qasim-1, Rs 33.17-43.71, Bin Qasim-2 Rs 22.02- 30.41, Bin Qasim-3, Rs 18.57-34.23;(iii) KTGPS ll, Rs 22.92-32.75;(iv) SGTPS, Rs -11.32-32.94; (v) Korangi Combined Cycle Power Plant, Rs 25.53-50.06 with average range of Rs 21.06- 37.74 per unit
IPPs Connected MWs installed capacity in 2019 of 366 was unchanged 366 in 2023 and Dependable is 354. Their total connected MWs installed capacity cost of generation per unit is also high Tapal Rs 21.26-35.86, Gul Ahmed Rs 21.42-36.6, IIL and IISL Rs 10.38-11.77, FFBL, Rs 17.23-24.59, SPC 1&II Rs 7.07-8.73,
Industry Connected MWs installed capacity in 2019 of 87 was in 2023 of 139 with dependable 94. Similarly, their total connected MWs installed capacity cost of generation per unit is also high: Lotte Chemical is Rs 11.44-40.11, IIL and IISL Rs 10.38-11.77, FFBL, Rs 17.23-24.59, Lucky Cement Ltd. Rs 9.56 -10.55.
RE MWs installed capacity in 2019 of 50 was 2023 in 202 (including net metering of 102 MWs) with dependable 79
HSD consumption in its generation has ranged between 0.07-1.36% costing Rs 47.53- 53.08 per unit
RFO consumption in its generation has ranged between 0.41-54.86% costing Rs. 33.14- 44.66 per unit
RLNG consumption in its generation has ranged between 39.61- 93.51% costing
Rs 22.97-33.49% per unit
With external purchase of electricity per unit from CPPA-G at Rs 6.27-11.03, average range was Rs 8.34-13.59 per unit
In FY 2022-23 KE) experienced a shortage of its own generation capacity to serve electricity demand in its service area and relied on CPPA-G, its own generation fleet by extending agreements, second time, with legacy RFO-based IPPs established under the Power Policy of 1994 and Captive Power Plants (CPPs) to meet power demand in its service area.
KE’s existing fleet primarily relies on imported fuel, is of relatively lower efficiency, resulting in increased costs as it continues to operate its older and less efficient BQPS-I complex, efficiency around 30%, leading to higher per unit costs compared to the more cost-effective power plants available on the National Grid system.
Under the privatization agreements, KE was entrusted with the responsibility of establishing and maintaining its own efficient, cost-effective generation fleet to adequately meet the demands of its consumers. The agreement also allowed KE to procure electricity from the NTDC system based on marginal cost.
To mitigate this delay in capacity enhancement and meeting its franchise area demand, drawing more power from the National Grid has alleviated the issue of expensive generation in KE system upon decision that NTDC/CPPA-G would supply electricity to KE at a rate at par with DISCO for a specified MW capacity.
With the availability of surplus power generation capacity at CPPA-G, the limits for supplying electricity to KE have been further expanded and is focused to provide additional 1250 MWs upon completion of grid connectivity and 1200 MWs older plants retirement in 2025 will reduce unit cost and tariff differentials. KE projects Karachi’s demand of 5000 MWs by end of this decade
Infrastructure limitation in NTDC network be urgently resolved
Given that during FY 2022-23, system constraints led to a financial impact of Rs. 20,262 million, comprising Rs. 20,203 million due to under-utilization of efficient plants and Rs. 59 million due to various system constraints.
Furthermore, payment obligation on Account of Non-Project Missed Volume (NPMV) due to grid constraints, scheduled maintenance and other potential issues including RE projects during FY 2022-23 was Rs. 10.517 billion, compared to Rs 1.177 billion during FY 2021-22
PLAC are allowed to power plants under their respective Power Purchase Agreements (PPAs), if plants are operated below full load especially base load power plants at Part load results in lower efficiency and higher generation costs in the monthly FPA. In FY 2022-23, an amount of Rs. 46.59 bn has been incurred compared to Rs. 38.20 bn paid during the previous year. In this context, efforts should be made towards operating coal and other efficient and cost-effective thermal plants with steam
There are other plants on the merit order using RFO and HSD that need to be retired or if efficient, cheaper fuel provided including from captive power plants to reduce their EPP ranging from Rs. 25.6 to Rs. 56.6 per unit .
Given that with KE situation, KE long-term generation plan, despite its vision to achieve 30% generation (~1182 MWs) by 2030 through investment in renewables (Rs. 484bn) is imperative and a priority for NEPRA, PPIB and CPPA G to ensure there is no delay in commissioning of Punjab Thermal Power (Pvt.) Limited with an impressive efficiency of above 61% beyond its planned time, 840 MW Suki Kinari Hydropower Project’s EPC stage tariff determined on March 28, 2014 but commissioning is now expected 10 years later at end of this year including Kohala Hydropower Project (1,124 MW), Azad Pattan Hydropower Project (700 MW) and Riali-II and Kathai Small Hydropower Projects (708 MW) in December, 2025.
There are 5 multiple fueled projects (1066MWs) expected in 2024-25, 24 projected (7460 MWs by 2032 whereas IGCEP 2022 targets 12 IPPs (1563 MWs) by 2024-26 At present, PPIB is actively advancing a portfolio of fifteen (15) IPPs primarily focused on hydro and coal- based projects, boasting a combined capacity of 7,705 MW.
Project management is weak and delay in commissioning of indigenous fuel power plants has a manifold financial impact: (a) it leads to the operation of more expensive power plants, incurring higher generation costs, (b) there is an additional expenditure on foreign exchange for the import of fuel, an expense that could have been avoided had the hydropower plant been commissioned on schedule, (c) the extended construction period leads to cost overruns for the project.
Intent and approach can also be learnt from EU which took on the challenge recently through European Natural Gas Demand Reduction Plan and achieved in 3 years about 15% reduced consumption by households and industry.