Pakistan Power Sector Review and Outlook

NEPRA3Pakistan’s National Electric Power Regulatory Authority (NEPRA) has released its annual State of the Industry Report 2014 covering a detailed review of major segments of the power chain. Highlighting pertinent issues in generation, transmission and distribution and developments over the period, the report also prescribes possible solutions to relieve ailing players of the sector.
Key recommendations in the report include the diversion of gas to power generation, LNG price and tariff to be set after analyzing all alternatives, technical studies to assess the impact of new renewable energy plants on the national grid, timely completion of coal based generation projects and decentralizing the role of PEPCO and ministries. In addition, recent developments in the media regarding the planned release of the 2015 Power Policy have renewed impetus for promoting investment in the sector in the long run.
During the period under review 105,733GwH of electricity were produced, registering an increase of 6.7%YoY. Analysis reveals that diverting 150mmcfd to the four IPPs currently operating on gas would allow them to operate on gas throughout the year instead of HSD during the winter months. Gas supply deficit leaves the room for RLNG fired power plants, NEPRA has advised for a thorough analysis of alternatives before RLNG based power plants are setup.
Deterioration in the efficiencies and generation levels of GENCO’s (installed capacity of 4,829MW) is also a point of concern while GoP’s initiatives to setup large coal fired plants and invest in GENCO’s repairs and extensions are beneficial. However the privatization process for these GENCO’s is already underway casting doubts on the timing of these moves. IPP’s have added 7% generation to the grid over the year, with a capacity utilization averaging 77%.
Lack of proper management aside, NEPRA has highlighted the need for T&D losses to be curtailed by DISCOs, where they continued to disappoint as T&D losses still hover slightly below 19%, while recoveries remained around 89% for FY14. Moreover, NTDC has been criticized for not upgrading its systems to allow for accommodating newly initiated power projects including planned hydro projects in Dasu, Diamer Basha, and imported coal projects on coastal locations with approximate costs of US$9 billion.
Projections for future capacity additions to the grid and increase in demand show an increase in the shortfall reaching 4,920MW by FY16, with a reduction in the shortfall every year thereafter, leading to a surplus by FY20. In order to tackle the situation, major recommendation in the report include 1) diversion of gas to power generation, 2) LNG price and tariff to be set after analyzing all alternatives, 3) technical studies to assess the impact of new renewable energy plants on the national grid, 4) timely completion of coal based generation projects and 5) decentralizing the role of PEPCO and ministries.

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