Pakistan recorded highest power generation in FY22

Pakistan recorded its highest power generation of 143,192 GWh (16,346 MW) during FY22 up 10% YoY primarily led by (1) overall pickup in economic activity and (2) increased demand amid rising weather heat levels.

Hydel contributed the most to power generation (25% in FY22 vs. 30% in FY21), followed by RLNG (19% FY22 vs. 21% in FY21) and Coal (19% in FY22 vs. 21% in FY21) based power generation. Nuclear, Gas, Furnace Oil (FO), and Wind based generation contributed 13%, 10%, 9%, and 3% respectively towards country’s power generation in FY22.

In absolute terms, Nuclear and FO contributed most towards additional power generation, followed by Wind and HSD based power generation. Hydel based power generation remained restricted amid lower water inflows.

New addition to the system includes; Punjab Thermal Power (capacity 1,320 MW), Karachi Nuclear Power Plant – Unit 2 & 3 (capacity 1,140 MW & 1,145), Karot hydropower (capacity 720MW), and Lucky Electric Power (capacity 660MW).

Wind power based generation increased by 58% YoY due to addition of 700 MW generation capacity in the system.

This takes total installed capacity in the country touched 39,427 MW in FY22 compared to 34,550 MW in FY21.

Power generation witnessed jump of over 20% on MoM in Mar-2022 primarily due to higher demand amid reduction in electricity tariff by Rs5/unit announced by the Former Prime Minister Imran Khan on Feb 28, 2022.

However, power generation started decline from May onwards due to non availability of fuel including RLNG & Coal amid higher international prices, and shutdown of few plant amid technical issues.

Economic activity remained upbeat where Pakistan recorded GDP growth of 6% in FY22. Along with GDP, Large Scale Manufacturing (LSM) index has improved by 11.7% YoY during 11MFY22.

With economic slowdown where we expect GDP is expected to clock in at 3.5%-4% in FY23 amid higher interest rates, higher energy prices and currency devaluation, we expect demand for power will remain contained.

The average fuel generation cost was up by 93% YoY to Rs9.3/KWh in FY22 compared to Rs4.8/KWh in FY21. In the month of Jun-22, fuel cost up by 160% YoY and 12% MoM to Rs14.7/unit.

It is interesting to note that around 50% of Pakistan’s power generation is from RLNG, Coal and FO with an average fuel cost of Rs17/unit in FY22. Rest 50% power generation is at cost of around Rs2/unit.

Courtesy – Topline Securities

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