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Govt on track to resolve energy crisis: experts

The country’s ailing energy is recovering at a satisfactory pace as the new government has substantially reduced the production cost by simply applying a merit order in which the lowest cost producers are given preference, experts said on Monday.

Power experts say gas-fired power generators run by independent power producers (IPPs) were denied gas throughout the tenure of the previous government and when they were asked to produce power they had to use high speed diesel, which is seven times more expensive than gas.

Meanwhile, most efficient furnace oil based IPPs remained idle while public sector power generation companies were asked to produce electricity between Rs21 and 28 per unit against an average of Rs14.50 per unit power produced by IPP – dramatically increasing the production cost of electricity.

However, after clearing the entire circular debt of IPPs, the government ensured sustained production of power at lower rates.

The power experts argued that the new government is fortunate to have inherited the current system when hydel generation is high – providing breathing space for the government to chalk out a strategy to reduce losses by targeting power thieves, evaluating higher tariff for industries and commercial consumers and targeting subsidies geared towards lower income group.

Former WAPDA chairman Tariq Hameed said IPPs are producing power at full capacity. The total power generation of IPPs stood at 9000 MW, including the 600MW Chashma power project, 6100MW from projects added under the 1994 power policy and 2900MW added under the 2002 power policy, while nuclear power generation stood at 600MW from IPPs.

According to rules determined by WAPDA, Hammed said, six percent of these generators remain closed for annual repair and maintenance at any given time. “This means that a capacity of a little over 500MW is not available, reducing the availability of IPP capacity at any given time to 7900 MW,” he said.

He said the country is now producing between 14000 and 15500MW electricity daily depending on the indent issued by the National Transmission and Dispatch Company (NTDC). “We can expect addition of another 500MW when one of the Mangla generators becomes operational,” he said, adding that hydel generation at present ranges between 5500 and 6000MW.

The former WAPDA chairman said public sector thermal power generation is costly and ranges between 1900 and 2200MW against production capacity of 3150MW. Further, he said, the current energy mix is favourable for the power sector as far as the cost of production is concerned, he added.

Power sector expert Mohsin Syed said the cost of 5500MW hydel generation supplied by WAPDA is Rs1.27 per unit. He said 2000MW of power is being produced from gas which costs Rs5 per unit (ranges between Rs2 and 7 per unit). The nuclear power of 600MW produced at Chashma, he added, costs Rs6 per unit.

He went on to add that 8100MW power available in the system is low cost, while the remaining 6000-7000 MW is produced through furnace oil at average cost of Rs16 (ranging between Rs14.5 and Rs21 per unit in some public sector companies).

Syed said the average cost of power to the distribution companies fell from Rs15 per MW to around Rs8.50 per MW. After accounting for line losses at 20 percent, the cost will increase to Rs10.2 per unit, he said, adding that the average selling price of the government is Rs9 per unit. “The government will still lose Rs1.20 per unit on power supplies,” said Syed. However, he added, the loss is substantially lower than what the government or PEPCO was incurring two months back.

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