LAHORE - Power generation went up by 9 percent annually to 6,979 gigawatt hours (GwH) in February 2018 where average utilisation of the industry clocked in at 33 percent, remaining stagnant on a YoY basis while declining by 5ppt on a monthly basis, according to the latest generation data reported by Nepra.

On a cumulative basis, 8MFY18 generation clocked in at 76,811GwH vis-à-vis 68,116GwH in the same period of last year (SPLY), depicting a growth of 13 percent YoY, taking average load factor to 49 percent (up 4ppt YoY).

Although fuel mix of the industry was skewed towards thermal plants with 76 percent share versus 72 percent in Feb’17, the contribution from FO (furnace oil) has been reported at 8 percent compared to 26 percent in the SPLY.

Dip in FO’s share is mainly attributable to higher share of coal (16 percent versus 0 percent in Feb’17), and RLNG (19 percent versus 8 percent in Feb’17). To note technical glitches at newly inaugurated RLNG plants (cumulative capacity of 3,747MW) still persists with their average load factor clocking in at 5 percent. Hence, the main reason for the jump in RLNG’s share in energy pie is mainly due to multi-fuel plants (including KAPCO) operating on RLNG.

Average fuel cost in Feb plunged by 19 percent MoM to Rs4.91/KwH led by lower reliance on expensive FO and higher reliance on coal and RLNG where fuel cost of coal (Rs5.20/KwH) is at 49 percent discount to FO price (PKR10.17/KwH). Going forward, it is expected share of FO to drop with inauguration of first unit of Tarbela extension (470MW) in the beginning of Mar 2018 and anticipated commissioning of Neelum Jhelum hydel plant (969MW) by end of Mar 2018. Furthermore, share of hydel will also pick up due to seasonality (summers).

All in all, it is believed, this does not bode well for small IPPs including Nishat Power Ltd (NPL) and Nishat Chunian Ltd (NCPL) with average utilisation of 40 percent in Feb 2018. Though it is believed complete shut down in the near term is not possible given projection of uptick in demand. Furthermore, continuation of technical glitches at the recently inaugurated RLNG plants will serve as a lifeline for FO plant.