Inefficiencies in generation and transmission have significant implications for monthly fuel price adjustments.

ISLAMABAD  -  The closure of 969MW Neelum Jhelum (NJ) power project, reduced generation from Guddu power plant and system constraints have resulted in accumulated loss of Rs43 billion during the first three months of FY2024-25.

In his additional note on the monthly fuel charges adjustments for the Ex-Wapda Discos, Member Nepra said that inefficiencies in generation and transmission have significant implications for monthly fuel price adjustments. Below are key inefficiencies in the generation sector that are notably impacting these adjustments and the overall power sector:

The absence of generation at the 969MW Neelum Jhelum (NJ) power plant in September 2024 resulted in increased reliance on costlier plants, causing a loss of around Rs4.9 billion, based on historical generation and marginal costs, while the total accumulated loss for the first quarter of FY 2024-25 due to higher-cost generation was Rs17.2 billion, said Rafique Shaikh, Member Sindh (Technical) National Electric Power Regulatory Authority.

He said that open cycle operation of the Guddu 747MW power plant in September 2024 incurred a loss of Rs0.52 billion, as open cycle generation costs 1.5 times more than combined cycle mode. The cumulative loss for FY2024-25 from this operation is around Rs2.3 billion.

Reduced generation at the Guddu 747MW power plant in September 2024 led to increased reliance on costlier plants, resulting in a loss of about Rs6.4 billion. The total accumulated loss for FY2024-25 due to higher-cost generation was more than Rs18 billion. The non-production of energy from the 747MW Guddu and 969 MW NJ power plants is also placing a significant foreign exchange burden on national exchequer.

Against a dependable capacity of 22,541 MW from thermal “Take or Pay’ power plants, the average utilization for September 2024 was only around 40%. The generation of 12,487 GWh in September 2024, against a dependable capacity of 37,069 MW, reflects an average utilization factor of 47% of the dependable capacity. The sale of electricity in September 2024 decreased by 1,372 GWh compared to the reference value. The total reduction in electricity sales for the first quarter of FY2024-25, compared to the reference value for the same period, amounted to 5,189 GWh. This decline may lead to an increase in the quarterly adjustment for electricity consumers.

The average utilization factor of the HVDC during September 2024 was only 46%, while consumers are still paying for a 100% capacity factor. Member technical said, “The PLAC for September 2024 amounted to Rs3.864 billion. Cumulatively, the PLAC for FY2024-25 has now reached more than Rs14 billion. The amount for previous adjustments stood at Rs9.7 billion during September 2024. This significant backlog of previous adjustments is undesirable. In September 2024 alone, system constraints resulted in a financial impact of approximately Rs. 529 million, contributing to a total of Rs7.778 billion for the first quarter of FY 2024-25.”