History
By early 90s, though our generation capacity stood at 9293MW, we were not only short of supplies by ~25%, but 62.7% of the capacity was thermal despite the country’s hydel potential of 60,000 MW. Since the early 80s, privatization had started being presented as the panacea for the sector’s ills. Privatization of KESC in 2005 was a result of this approach; although if this were the only solution then 13 largest oil companies would not have been PSEs.
Under a similar mindset, ‘unbundling' of WAPDA was exercised in 90s. However, the T&D losses of ~20%, theft of ~12% and ever increasing thermal imports and circular debt, amply reflect that it failed.
Load shedding
The generation capacity of Pakistan (CPPA-G & K.E baskets, both) currently stands at 38,719 MW; which is far more than the connected load. However, this load shedding indicates that the supply chain is still quite fragile.
As to historical context; we observe a net increment of only 7% in FY21 viz-a-viz FY20, in power generation catered by ex-WAPDA Discos/CPPA-G basket. However, the aggregate power generation of Pakistan for FY2018, 2019, 2020 and 2021 has respectively been 133669, 136,532, 134,745.70 and approx. 150400 GWH. Thus, the said generation in FY2021 is ~12% higher than FY20; which seems significant. The figure includes the annual power generation and purchases of K.E, which remained 20177GWH(approx) i.e. ~9% higher than FY20.
As to the sub-sectoral behavior; the annual variation in domestic load since FY2018 till FY2020 has, respectively, been 10.97%, -0.83% and 4.24%; while, in commercial load it remained 9.55%, -1.52% and -6.06% and in the industrial load it was 14.39%, 4.70% and -10.6% and in agriculture, 9.90%, -3.21% and -0.53%. It was definitely challenging to plan the future consumption on the basis of this erratic pattern and the all engulfing menace of Covid-19. Still, the situation was relatively normal till March, 21 when power generation on the CPPA-G basket increased by 30% YoY and 23% versus Feb-21. Hydel has proven to be a savior in many such situations earlier. However, it was able to raise its contribution only marginally in March and April, 21 viz-a-viz the associated generation in the corresponding period in FY20. The increased contribution from Coal by ~692GWH, ~200 GWH by Furnace oil and ~900GWH by LNG viz-a-viz March 2020 also partially filled the gap in March, 21. However, the generation continued to increase in leaps and the net increment stood at 45% in May, 21 vizi-a-viz March, 21.
In March 2021, we observed an upsurge in generation of 41% on the K.E basket too. This included ~32% increment in its own generation and ~53% in purchases, which included substantial increment in intakes from the CPPA-G basket. The intakes were more than twice in June 2021 of their level in January 2021.
As of March 2021, the government introduced a special industrial power package in November 2020 whose impact became visible at the end of February this year. Secondly, the authorities implemented a decision in March for the entire country i.e. to shift as many gas-based captive power plants to the national grid as possible with the intent to divert the freed gas for centralised generation. It was expected to make available additional ~150 MMSCFD gas. Though the plants were able to partially shift to the grid in March 2021, but the T&D system’s capacity challenges probably increased the losses.
This needs a thorough study, because: a) gas generated even lesser power in FY21 i.e. 14,340 GWH viz-a-viz 15064 GWH in FY20 (CPPA-G system), b) Study of impact of the diversion can help in future planning; especially when Hydel contribution remained 38804 GWH in FY21 i.e. meagrely above 38700 GWH of FY20 (CPPA-G system).
The aforementioned factors increased drag on expensive fuels etc, causing increase in the generation cost.
In addition, occasional snags in the LNG supply chain affected the utilisation of the associated plants. Also, coal imports were lesser by ~1.1 million tons for July 2020 till Feb 2021 viz-a-viz the preceding year and increased requirement. This, along with the three times increase of its price over the past one year also appears to have impacted its supplies. Furthermore, at least partially the load-shedding seemed “revenue based”. E.g. on June 8-9, on the CPPA-G system against the available generation of 23,500 MW, the power drawn was only 16,040 MW.
The analysis remains incomplete until the following associated critical aspects are highlighted.
Myths and facts
After every few years we hear that we are overcapacity i.e. despite ~25% population being devoid of electricity and our per capita annual electricity consumption is a meager 658KWh (China: 5297KWH, India: 972KWH and Norway: 26492KWH). Thus the ‘surpluses' are a phenomenon of sluggish development only.
Similarly, we hear a lot of criticism of capacity charges, take or pay clauses etc. They are an essential contractual norm; not an aberration. Their values and corresponding commercial terms, of course, are a function of the professional capacity of the relevant teams.
Circular debt is mostly presented as an essential evil. It is not. During FY20, DISCOs contributed a loss of around 59 Billion PKR due to their inefficiency in T&D losses (i.e. over and above the allowable threshold of 15.97%) and Rs. 160 billion in failed recovery. T&D losses in China, Japan and Singapore are, respectively, ~5%, 4.3%, and 2% only. Thus ~400 Billion PKR can be annually saved by focusing on this aspect alone. Similarly, public sector plants are generally 20% less fuel efficient. We can fulfill 25% of our un-served demand just by addressing this gap. However, no tangible change is possible in this respect till the entire chain, including SOEs’ boards, is professionalized and the government extricates itself from directly managing them. The continuous increment in prices and circular debt is its numeric reflection. The fact which more expressly highlights it is that around 150 fatal accidents (employees and public, both) are reported yearly by the distribution companies alone.
What is to be done?
Firstly, heavy penalties need to be introduced by NEPRA to improve the safety records and an independent statutory team of world class energy professionals is essential for the nomination and performance evaluation of all the SOEs’ boards. Secondly, a debottlenecking study of the existing hydel grid and impact of diversion of the capacity power load to the national grid is essential.
Thirdly, shutting down of some inefficient plants seems to have affected utilization of gas. Attention to this aspect can make available ~150 MMSCFD of gas with further additions through development of existing discoveries. Similarly, underground gas storage is an operational and a strategic imperative.
Fourthly, gas consumption (~800MMSCFD) by the fertilizer industry necessitates diversification, like China, to indigenous coal based fertilizer. Also, domestic use of bio-gas (potential: ~1000MMSCFD) can spare the gas reserves for power etc.
Fifthly, imported coal needs replacement with local coal. India is already on this drive. Similarly high T&D losses necessitate encouraging off-grid solutions.
I am confident that the above recommendations can help in calibrating/developing Pakistan’s future power consumption plans.