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Imprudent approach of power ministry causing over Rs2bn loss to exchequer

The tendency to provide available resources at the whims of power purchasers is causing the exchequer a monthly loss of over Rs2 billion as inefficient power producers are preferred over efficient ones that could save precious fuel and money, said experts.

The power sector experts are appalled by the imprudent approach of the ministry of water and power and the National Transmission and Distribution Company (NTDC) that have failed to chalk out a strategy that could at least reduced the woes of the cash-starved power sector.

“The power production in the country is extremely below the dependable installed capacity of the sector,” said Mohsin Syed, power sector expert.

The failure of the distribution companies to reduce losses or theft and their inability to fully collect the bills has forced the power sector authorities to reduce the production by selectively providing the available resources to public and private sector power generating companies, he said.

“When you do not have the resources you have no alternative but to curtail production; however, in such cases planners ensure that the available funds are utilised most efficiently; and they could generate maximum power,” he said.

Syed said that the official data made available to some international donors revealed that in January 2013, Hubco Karachi was operating at its full capacity of 1,200MW. This company produces power at Rs16.53 per unit, he said.

Hubco Narowal, having generation capacity of 214MW, was producing only 77MW in line with the funds provided to it, he said, adding that this company produces power at Rs14.85 per unit, which is Rs1.68 per unit cheaper than Hubco Karachi.

Similarly, he said, Nishat Chunian produced 135MW out of its capacity of 196MW and Nishat Power produced only 32MW out of its capacity of 195MW. The cost of these two companies is Rs14.80 per unit.

Syed said that had the funds been provided to these three companies instead of Hubco Karachi, they would have generated 357MW at Rs1.70 per unit less cost.

One megawatt is equivalent to 1,000 units that means that per hour saving would have been Rs609,000 (357x1000x1.70) and in 24 hours the power sector could have saved Rs14.56 million per day, or Rs436.96 million, per month, he said, adding that Hubco Karachi supplies 750MW to Karachi and its power generation should be limited to that extent and the balance resources should be transferred to the low-cost generation.

Ghalib Atta, another power sector expert, said: “The situation is more alarming if we look at the wastage of gas in the public sector companies.”

Most of the public sector gas-run generators operate at 50 percent less efficiency than the private sector modern gas-run power units, he said, and draw the attention to the cost of power generated by Jamshoro and Muzaffargarh gas-run units.

He said 700MW Jamshoro plant produces one unit of electricity at Rs6.25 from gas, while Muzaffargarh unit produces power at Rs6.58 per unit. Muzaffargarh is producing 1,120MW power from gas (on RFO its cost is around Rs19 per unit).

Atta said that the private sector gas-run plants having cumulative capacity of producing 844MW are closed. These, he said, include 209MW Halmore, 210MW Saif, 212MW Sapphire, and 213MW Orient.

These plants produce electricity at Rs4.04 per unit. This, he said, is Rs2.54 per unit cheaper than the power being produced through Muzaffargarh unit. This means that by not diverting gas to the efficient units, the power managing authorities are losing Rs21.43 million per hour (844x1000x2.54), which is equivalent to Rs51.45 million per day, or Rs1.54 billion, per month.

Atta said that these are a few examples of imprudent utilisation of available resources. A more detailed study, he said, would reveal more similar losses.

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