PML-N Govt adds 12000 MW of electricity
Aftab Ahmed
Islamabad: Power Regulator admits that PML-N government has added 12000 MW of electricity in the national grid to overcome load shedding that hit the country since 2009-10.
After the addition of 12000 MW of electricity to the national grid, the total capacity of electricity jumped up to 39,145 MW in the country.
In its annual industry report 2019, National Electric Power Regulatory Authority (Nepra) said that a look at the historical trend shows the cyclic nature of development specifically in the power generation sector. Due to excessive and frequent shortages of electricity in the nineties, 1994 Policy for power generation was introduced which attracted Independent Power Producers (IPPs) and by 2002 Pakistan was contemplating export of power to India.
It is to be noted that due to availability of electricity relatively higher growth in electricity consumption was also witnessed, however over the next years, no new generation was added with the result that by 2009-10 the load shedding again hit the country.
Taking cognizance, the policymakers at that time pursued a single-point agenda to eliminate load shedding and more than 12,000 MW of power generation plants have already been added over a period of three years.
The installed power generation capacity of Pakistan as of June 30, 2019, stands at 39,145 MW, of which 36,061 MW is connected with the NTDC system whereas 3,084 MW is connected with the K-Electric Limited (KE) system. It may be noted that close to 1,700 MW of thermal capacity was added to the PEPCO system during the period; an increase of 7.30% over the last year. About 1,100 MW of hydro-based capacity was also added to the system during the same period.
Installed capacity
The installed power generation capacity of Pakistan as of June 30, 2019, stands at 39,145 MW, of which 36,061 MW is connected with the NTDC system whereas 3,084 MW is connected with the K-Electric Limited (KE) system. It may be noted that close to 1,700 MW of thermal capacity was added to the PEPCO system during the period; an increase of 7.30% over the last year. About 1,100 MW of hydro-based capacity was also added to the system during the same period.
The installed capacity does not fully contribute to energy production due to various factors like auxiliary consumption, the impact of site reference conditions, and seasonality effects on the renewables and large hydropower plants. After accounting for the above factors, the capacity, known as the Generation Capability, is effectively used for meeting the electricity demand. It may be noted that in the year 2020 and onwards, the generation capacity would be more than the demand.
The installed capacity of WAPDA Hydropower increased to 9,389 MW at the end of June 2019 as compared to 8,341 MW, recorded in FY ended June 2018. Total installed capacities of thermal IPPs connected with the NTDC system at the end of June 2019 are noted as 16,946 MW; 1,649 MW higher as compared to FY 2017-18. The enhancement incapacity has been recorded due to the induction of coal-fired 1,320 MW China Power Hub Plant and 330 MW Engro Thar Energy Power Plant. The energy generated by thermal IPPs connected with the NTDC system during the FY 2018-19 is noted as 62,598 GWh against 62,434 GWh during the FY 2017-18 showing an increase of 164 GWh.
As reported by NTDC the number of planned outages at 500 kV and 220 kV levels in 2018-19 have decreased as compared to 2017-18. It is observed that the number of forced outages at 500 kV level in 2018-19 have also decreased as compared to 2017-18, whereas at 220 kV level the number of forced outages have slightly increased in 2018-19 as compared to 2017-18.
As for the duration of outages, the total duration of planned outages at 500 kV level has increased whereas, at 220 kV level the same has decreased in 2018-19 as compared to 2017-18. For forced outages, the total duration also increased in 2018-19 as compared to 2017-18 for both 500 kV and 220 kV levels.
The circular debt, higher transmission losses, inefficiencies in power firms continued haunting the power sector in the financial year 2018-19, reveals power regulator in its annual industry report calling for retiring all inefficient state-run power plants and privatize all power distribution companies (Discos).
National Electric Power Regulatory Authority (Nepra) has observed that the centralized governance model for DISCOs has failed to bring any noticeable improvements over a period of more than 15 years now whereas the distribution losses and recovery ratio have stayed where they were about five years back.
The regulator further noted that 12000 Megawatt electricity was added to the national grid during the last three years but transmission and distribution sectors were completely ignored.
Circular debt continued haunting the power sector and accumulated to almost Rs1, 600 billion due to inefficiencies of GENCOs, DISCOs’ inability to achieve targets for T&D losses, and recovery ratios as allowed by NEPRA and other governance issues like delay in tariff notification.
Discos failed to reduce receivables from its customers during the period under review. The overall receivables of all the DISCOs had increased by Rs. 248.85 billion which is considerably higher than the receivables of Rs. 166.26 billion during FY 2017-18.
https://newztodays.com/circular-debt-up-by-rs-532-billion-in-ptis-one-year-tenure/
As of June 30, 2019, the overall distribution sector receivables stood at Rs. 1,145 billion whereas, the receivables at the start of this financial year were Rs. 896.15 billion. During FY 2018-19, receivables of DISCOs from the Federal Government have increased by Rs. 6.52 billion as compared to FY 2017-18. The receivables of DISCOs from provincial governments of Punjab, Khyber Pakhtunkhwa, Sindh, and Balochistan have also increased in this financial year. In addition, FATA receivables from domestic consumers have increased from Rs. 26.85 billion in FY 2017-18 to Rs. 32.58 billion in FY 2018-19. The receivables from KE in FY 2018-19 have increased by Rs. 13.33 billion.
Overall DISCOs have shown an improvement in losses of 0.62 % over the last year. PESCO, MEPCO, and FESCO have been able to reduce their losses by close to 1%. LESCO also improved its losses by 0.66%. Other DISCOs including IESCO, TESCO, GEPCO, HESCO, and TESCO showed marginal improvement in this area. On the other hand, SEPCO’s losses deteriorated by 0.30% while QESCO’s T&D losses worsened by more than 1%. Reduction in losses for all DISCOs combined translates into a saving of around Rs. 6 Billion.
Circular debt is a major issue confronting the power sector. One of the contributors to circular debt is the high transmission and distribution losses in DISCOs. Failure of DISCOs to show any improvement in their actual level of losses viz-a-viz the Authority’s allowed target resulted in an annual loss of around Rs. 30 billion based on the tariff that remained notified during the period under consideration i.e. FY 2018-19. It is pertinent to mention that notified weighted average T&D losses target for the FY 2018-19 was 15.72%, whereas DISCOs reported actual T&D losses for the same period remained around 17.70%.
Adding further to circular debt is the low recovery ratio of DISCOs. While setting the consumer-end tariff for DISCOs the Authority considers 100% recovery percentage, however, the actually reported recovery percentage of DISCOs, remained at around 90.25% for the year 2018-19 (as per DISCOs’ Performance Statistics published by PEPCO). The impact of lesser recoveries viz-a-viz Authority’s set target of 100% has resulted in an annual shortfall of around Rs. 130 billion.
Though generation capacity has been added, some of the important issues like the expensive cost of energy supply could not be resolved. With the exception of a few newer power plants, public sector GENCOs with drastically inferior efficiencies, which under some cases have deteriorated to about, half of their design values have not been taken out of the system against the recommendations of the regulator. Domestic gas, which is one of the scarce resources of the country, is being provided to the captive power plants that use it for running smaller size machines with very low efficiencies. If such gas is diverted to efficient machines, the cost of supply to the grid may be brought down. Similarly, long-term contracts for RLNG import have added constraints for the system operator to operate it optimally.
The overall recovery of bills in 2018-19 stood at90.25 percent against 90.07 percent in 2017-18.
It is noted from above that, PESCO recovery position deteriorated about 1% whereas TESCO has shown an increase of about 1% in the recovery position in 2018-19 as compared to 2017-18. In Punjab and Capital Territory, IESCO’s and GEPCO’s recovery percentages dropped by 2.75% and 0.89% respectively. Whereas LESCO and FESCO have shown almost the same recovery ratios in the last two years. MEPCO improved its recovery position by about 2% this year over last year.
In the province of Sindh, HESCO’s recovery ratio deteriorated by approximately 2% whereas SEPCO improved its recovery position by 3.49%. QESCO, operating in the province of Balochistan, has improved its recovery ratio by 1.76%.
The installed capacity of KE’s own generation fleet during FY 2018-19 has been noted as 2,294 MW same as compared to FY 2017-18. Since KE is responsible for maintaining integrated systems of generation, transmission, and distribution, therefore KE is required to look for other sources to meet the supply and demand gap. The inability of KE to effectively increase its generation capacity has made it dependent on external power sources, including the import from the NTDC system. During FY 2018-19, in addition to purchasing power from IPPs/CPPs including Gul Ahmed, Tapal Energy, KANUPP, Anoud Power, International Steel Limited, International Industries Limited, FFBL Power, SNPCL, and KE also imported around 650 MW from the NTDC system whereas agreement for purchasing electricity from three wind power plants of 150 MW has also been signed with NTDC.
KE generated 10,727 GWh during FY 2018-19 that is an increase of 389 GWh over the last year. In addition to its own generation, KE imported 7,769 GWh to meet its increasing demand.
Recommendations
Public Sector GENCOs are contributing to expensive energy production due to their inferior efficiencies. The Government may consider retiring these plants and/or replace them with efficient power generation facilities.
To reduce the impact of idle capacity on the overall tariff, Federal Government is recommended to carry out a thorough analysis of any requirement for the import of additional power by K-Electric from the NTDC system. NEPRA considers that it will be in the interest of the overall system, as it will help improve the utilization of power plants, reduce excess capacity itself and provide continuity of power supply to K-Electric consumers in the short to medium term.
Load-shedding policies must be targeted to the areas with the least recovery for the short term. Separation of feeders may be considered to isolate paying and non-paying areas. Regressive policies to impose load shedding on larger areas would result in higher tariffs for the rest of the paying consumers.
The existing setup, with PEPCO assuming central control, is not capable of delivering the necessary improvement in the system and controlling the accumulation of Circular Debt. For arresting Circular Debt, the accounting measures only, would not be enough and structural changes are required to be made. In this respect besides allowing due independence as foreseen under the 1992 power sector reform plan to GENCOs and DISCOs, total privatization or public-private model may be explored by the Federal Government.
