EUR 4.64 For Business Accounts Only

Power generation costs on the rise; COD of new plants awaited

• Power generation in Pakistan (ex K-Electric) rose 4% YoY during 7MFY17 (Jul-Jan period), averaging at 12,248MW (it peaked at 15,285MW in Jul’16). Generation has been flattish YoY as moderate increase in RFO generation (up 6% YoY) was offset by lower generation from gas (down 4%) and hydel.

• Cost of generation has been creeping up. This is partly due to greater generation on RFO amid rising oil prices, but also HSD based generation is on the rise because of decline in gas and LNG provision to dual fuel gas based plants. Hence, circular debt buildup has been an issue as recoveries in distribution companies is not catching up.

• A remedy to moderate the rise in cost of power generation will be early or timely commencement of Sahiwal coal based plant (1320MW) and LNG based plants (2780MW in total). These will be significant additions also to curtail load shedding.