Pakistan Power_Nov’19 Generation suffers from seasonal dip, (AKD Daily, Jan 23, 2020)
AKD Daily
Pakistan Power: Nov’19 Generation suffers from seasonal dip
- CPPA-G generation data for Nov’19 indicates 7.43GwH units (-22%MoM/-1%YoY) of generation during the month, translating to dependable capacity of 10,325MW a paltry 31.6% load factor (based on net nameplate capacity of 32,628MW), vs. 34.3% in Nov’18
- The absence of FO based generation during the month and lower RLNG sources production (9.2% vs. 17.2% in Nov’18) while the influx of Coal (27.3% share vs. 13.8% in Nov’18) aided in reducing overall generation cost to PkR3.85/KwH down 22%YoY/35%MoM, an encouraging trend in reducing the EPP component of total energy costs
- 5MFY20 cumulative generation amounts to 58.9GwH (+3%YoY), with cost of generation averaging PkR5.52/KwH (down 8%YoY), where the stark rise in Hydel/Coal (+17.5/+64.8%YoY hike in units generated), have effectively pulled down system wide average costs (Coal average generation cost of PkR6.13/KwH down 10%YoY)
- With unit generation growth softening in the backdrop of capacity additions, the GoP’s FY20 initiative to recover full cost of tariffs (including shortfalls in CPP payments) is likely to further stifle generation demand as the higher consumer tariff reduced switching costs (mostly in favor of captive power).
- Full tariff recovery has positive effects for liquidity in the power chain, where in addition to the PkR200bn suku approved earlier this week, recovery of costs through periodic hikes in the consumer tariff are likely to favor IPPs. HUBC remains our top pick in the space, where payouts look on track to resume from 4QFY20 onwards.
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Hub Power Company is a holding company. Through its subsidiaries, Co. is engaged as a power producer in Pakistan that focuses on developing, owning, operating and maintaining power stations. Co. supplies electricity to Water and Power Development Authority and National Transmission and Despatch Company under long term Power Purchase Agreements for its Hub and Narowal plants respectively.
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