The April 2022 power generation figures reaffirm that Pakistan is well and truly back on the economic growth trajectory of FY17 and FY18. Another question is whether Pakistan can really afford such growth – as indicators of deterioration in the external account suggest. Either way, the 23% year-over-year increase in power generation in April 2022 is the highest growth on record, except for the induced low base period. by Covid.
12-month rolling average production is approaching 11.5 billion units – up 11% – a level last seen in August 2018. It remains to be seen whether Pakistan chooses to deliberately slow the economy, a much like fiscal year 2019, which could surely verify the double-digit electricity demand growth. For now, rising temperatures, steady growth and shrinking fuel supplies from captive energy suggest that power generation will hit all records this summer.
Fuel oil production at 1.56 billion units was the highest for an April month in five years. Some of them were intentional and others by choice. A 12% share in power generation had the highest share in fuel cost at one-third, costing Rs 44 billion. It is no surprise that April’s fuel bill was the highest of all months at Rs 134 billion, up 113% year-on-year.
Thankfully, the hydel generation seems to be getting back to normal – although still far from historic seasonal highs. A lot will depend on the water flows during the summer peaks, as far as the production mix is concerned. The production load on fuel oil is expected to be reduced in May as Pakistan has arranged 12 RLNG shipments which should be enough to keep all plants running at full capacity. That said, prolonged maintenance at one of RLNG’s largest plants could put a damper on work.
Throughout this time, the biggest respite to the generation mix and fuel cost has come from nuclear power. April 2022 saw the highest monthly nuclear power production at 2.2 billion units, 30% higher than the previous record high of last July. Nuclear power generation had a 17% share, just behind Hydel and RLNG, which each had 19%.
Imported LNG for May 2022 was purchased at the highest rates ever, and the GST-included consumer price reached $28/mmbtu, compared to $18/mmbtu in April 2022. With 12 cargoes in the system, the bill for May’s RLNG fuel for power generation will undoubtedly lead the way, and another record fuel cost bill is in order. The cost of fuel remained high at Rs 4/unit compared to the April benchmark rate. May’s monthly FCA could well be around Rs6/unit from the looks of things – unless Hydel has a huge surprise in store.