Pakistan’s total installed capacity to generate power increased to 45,888 megawatts (MW) as on June 30, 2024, causing hike in the cost of electricity production and pilling up the circular debt, as the installed capacity largely remained underutilised, a report from the National Electric Power Regulatory Authority (NEPRA) revealed on Tuesday.
In its ‘State of The Industry Report 2024’, the NEPRA stated that the country’s installed electric power generation capacity reached 45,888MW including the K-Electric (KE), while the average annual utilisation during the same period was only 33.88%.
“As a result, electricity consumers ended up paying for 66.12% of unutilised capacity, which includes cost of intermittency in case of RE power plants,” read the report.
According to the Economic Survey 2024, the installed capacity stood at 42,131MW in March 2024.
This suggested the capacity rose 9% (or 3,757 MW) in three months; from April to June 2024.
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At the close of the financial year (FY) 2023-24, the installed generation capacity in the “CPPA-G system” was 42,512MW. During the same fiscal year, the CPPA-G system experienced a maximum demand of 30,150MW and a minimum demand of 7,015MW.
In contrast, the CPPA-G system was able to serve a maximum load of only 25,516MW, and that was also for a limited duration. The average annual load served by the CPPA-G system during FY2023-24 was 18,463MW.
The circular debt escalated to Rs2.39 trillion as on June 30, 2024, remains a formidable challenge for the power sector as well as the country’s economy as a whole.
The growing circular debt compounded by defaulters owing Rs900.82 billion hampered the operational efficacy of DISCOs (distribution companies).
High transmission and distribution (T&D) losses and less than 100% recovery of billed amount contribute to the accumulation of the circular debt, according to the report.
The T&D losses, recorded at 18.31% for FY2023-24 compared to the allowed 11.77%, added Rs276 billion to the circular debt during the year. The low recovery rate of 92.44% added Rs314.51 billion to the circular debt during FY2023-24
The huge receivables of all DISCOs including the KE, which surged to Rs2.32 trillion in FY2023-24, “necessitate investigations into possible billing manipulations and accurate assessments of non-receivables,” the report read.
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Despite an installed generation capacity of 45,888MW as of June 30, 2024, persistent load-shedding occured in many DISCOs. The unreliability of the grid pushed consumers towards off-grid solar installations, “impacting DISCOs through lower or negative sales growth”.
Key issues identified in the report included high electricity costs, systemic inefficiencies, and a growing circular debt. External factors such as rising fuel prices, a high exchange rate, and long-term RLNG supply agreements, etc. further exacerbated these challenges, driving up electricity costs and jeopardising the sector’s long-term sustainability, the report said.
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