LAHORE - Pakistan’s latest power generation data shows a big seasonal drop of 29 percent monthly in November 2017 generation with winter season setting in. Overall, generation for the month of Nov 2017 recorded meager growth of 2% YoY.

More interestingly, the change in energy mix is quite prominent with share of FO (furnace oil) dropping to merely 9% in Nov’17; one of the lowest in the recorded history as the govt shifts its reliance to RLNG.

With another 1,320MW new capacity added to system in Nov’17, Pakistan’s installed capacity has jumped to 29,462MW, up from 20,774MW in Jun’13 (26,553MW in Jun’17).

Average generation cost on a net basis went down by 23% MoM to Rs4.13/KwH (excluding adjustment cost of Rs1.99/KwH) led by lower dependence on FO. However, on an aggregate basis, cost grew 55% YoY to Rs6.13/KwH.

Looking ahead, hydel share may go down (seasonal impact), however, share of coal and RLNG is expected to go up thereby keeping average generation cost in check. Dec’17 may not be daunting for FO plants as govt has announced partial commencement. Experts top pick is HUBC with TP of Rs135.

Seasonal factors have started to kick in whereby power generation for the month of Nov’17 clocked in at 6,994GwH, recording meager growth of 2% YoY against 6,840Gwh produced in Nov’16. Average load factor of the industry clocked in at 34% versus 36% last year. On a monthly basis, generation plunged 29%, which is in line with historic trend whereby the month of November has always observed lower generation compared to October due to seasonal factor. Cumulatively, in 5MFY18 generation jumped 13% YoY to 52,771GwH.

Generation cost on a net basis went down by 23% MoM to Rs4.13/KwH (excluding adjustment cost of Rs1.99/KwH). However on an aggregate basis, cost grew 55% YoY to Rs6.13/KwH despite lower reliance on FO mainly on account of previous adjustment. On an cumulative basis, 5MFY18 generation cost worked out at Rs5.57/KwH vis-à-vis Rs4.35/KwH during the same period last year. Individually, average generation cost of coal/RLNG clocked in at Rs4.29/7.75 per KwH which is significantly lower than FO cost (Rs10.06/KwH) thereby supporting govt’s focus.

Thermal generation with 65.4% share, once again, dominated the fuel mix whereby major contribution came in from gas (25% share Vs 28% in Nov’16) followed by coal (13% share). FO’s share in the energy pie went down by 10ppt YoY to 9% in Nov’17 as the govt announced complete shutdown of FO based power plants driven by (i) availability of RLNG, and (ii) induction of new plants (coal and RLNG) into the system that are more efficient and less damaging to the environment and proved to be quite capable of taking over FO’s share in the energy block. To note, Genco’s, that are highly inefficient, have not operated throughout Nov’17 and may not operate going forward as well driven by changing power dynamics.