Fuel Cost for Power Generation Down 19.2% While Electricity Prices Rise to Record High

While electricity prices have surged to a record high in Pakistan in the first seven months of 2023 (7MCY23), fuel costs for power generation have decreased by 19.2 percent year-on-year (YoY) to an average of Rs. 9.32/KWh, compared to an average cost of Rs. 11.54/KWh last year.

Power generation in the country went down by 8.5 percent YoY to 75,861 gigawatts per hour (GWh) in 7MCY23, while it was up 4.9 percent YoY in July compared to the same period last year.

Solar generation is up 36.9 percent YoY in 7MCY23, while the cost of production based on imported Iranian fuel increased by 30.3 percent YoY during the period in review.

According to data by Arif Habib Limited (AHL), power generation is up 8.2 percent month-on-month (MoM) to 14,839 GWh in July, compared to 13,715 GWh in June.

The country witnessed an increase in power generation on YoY basis after 13 months, up by 4.9% YoY during Jul’23

Power Generation
Jul’23: 14,839 GWh (19,945 MW), +4.9% YoY | +8.2% MoM
7MCY23: 75,861 GWh (14,910 MW), -8.5% YoY

Fuel Cost
Jul’23: PKR 8.34/KWh, -22.1% YoY | -13.4%… pic.twitter.com/VsvvSUaHzM

— Arif Habib Limited (@ArifHabibLtd) August 22, 2023

Major contributors during July 2023 were Hydel (37.2 percent), RLNG (19.7 percent), Coal (14.7 percent), and Nuclear (14.2 percent).

Hydel power generation is up by 10.9 percent YoY from 4,977 GWh in July 2022 to 5,518 GWh in July 2023. On an MoM basis, hydel generation is up 33.5 percent. For the period January-July CY23, it is up 9.2 percent YoY.

RLNG-based power generation increased by 37.7 percent YoY to 2,918 GWh in July 2023 from 2,120 GWh last year and is also up by 14.7 percent MoM compared to 2,544 GWh in June 2023.

Coal-based power generation increased by 21 percent YoY to 2,180 GWh in July 2023 from 1,802 GWh last year. On an MoM basis, coal-based power output shows a decrease of 10.5 percent in July from 2,434 GWh in June.

Nuclear power generation increased by 4.8 percent YoY to 2,107 GWh in July, up from 2,010 GWh last year, while monthly nuclear power generation shows an increase of 13.5 percent from 1,857 GWh observed the previous month.

As of July, solar-based generation is up 6 percent YoY from 71 GWh last year to 75 GWh in July. During 7MCY23, it surged by 36.9 percent YoY to 695 GWh from 508 GWh in 7MCY22.

Fuel Cost

During July 2023, fuel costs for power generation decreased by 22.1 percent YoY and 13.4 percent MoM, to an average of Rs. 8.34/kWh, compared to an average cost of Rs. 10.71 in July 2022 and Rs. 9.63/kWh in June 2023, respectively. For 7MCY23, fuel costs are down 19.2 percent YoY with an average cost of Rs. 9.32/kWh, compared to Rs. 11.54/kWh in 7MCY22.

The cost of production based on imported Iranian fuel increased by 30.3 percent YoY in 7MCY23 to Rs. 24.04 per unit. RFO was the priciest fuel with a fuel cost of Rs. 26.13 per unit during the period in review.