ISLAMABAD: The government officially recognized that imported liquefied natural gas (LNG) has become the country’s most expensive fuel for power generation. The multibillion-dollar LNG infrastructure, which was initially established nearly a decade ago to replace furnace oil, has now surpassed it.
The National Electric Power Regulatory Authority (Nepra) has determined the reference power-purchase tariff for each month of the current fiscal year. Hydropower, priced at Rs6.94 per unit, remains the cheapest source of electricity supplied to the national grid.
The power produced from imported LNG regasified before use, costs Rs51.42 per unit. This makes it more expensive than furnace oil-based power generation, projected at Rs48.56 per unit.
The power regulator, operating under the cabinet division, has noted that fixed capacity charges, accounting for 71% of the total cost, including exchange rate losses, are the primary reason for skyrocketing electricity prices. Energy cost constitutes around 29% of the total power-purchase price.
Despite 63% of the total power supply in the country is based on domestic resources, electricity prices remain high.
The regulator emphasized the importance of determining the reference power-purchase price. It directly affects consumers and represents 90% of the consumer-end tariff. Future fuel charge adjustments and quarterly adjustments are based on the projected notified power-purchase price references.
The regulator expects around 30% of total generation in the current year to come from hydropower, 17% from local coal, 12% from imported coal, 18% from nuclear power, 10% from local gas, 5% from RLNG, 2% from furnace oil, and the remaining 6% from renewables such as wind, solar, and bagasse.
The generation mix has improved considerably, with around 63% projected from indigenous resources and 18% from low-cost nuclear sources, according to Nepra.
The third-most expensive generation source is imported coal at Rs40.54 per unit. It is followed by wind power (Rs33.64) and electricity imported from Iran (Rs24.73).
Local coal is the sixth-costliest power source at Rs23.97 per unit, followed by nuclear fuel (Rs18.38) and solar (Rs15.04).
The cheapest power sources at present are bagasse (Rs14.83 per unit), local gas (Rs13.02), and hydropower at Rs6.94.
The utility company adjusts actual power-purchase prices throughout the year by implementing monthly and quarterly fuel charge adjustments.
The government projected a 4.7% power generation growth for the national grid in the 2023-24 fiscal year. However, actual generation in the previous fiscal year was around 9% lower than projected. Therefore, Nepra incorporated a 7% growth for 2023-24 to be realistic at 138,759 gigawatt-hours (GWh). The net energy available for power distribution companies and K-Electric would be around 134,523 GWh after accounting for transmission losses.
Nepra calculated the total power-purchase price of distribution companies for 2023-24 at Rs2.866 trillion. It includes fuel costs, variable operation and maintenance costs, and capacity charges.
The average power-purchase price for distribution companies, before adjusting for transmission and distribution losses, is Rs22.95 per kilowatt-hour (kWh).
Nepra projected average RLNG prices at Rs3,554 per million British thermal units (mmBtu) for the current fiscal year, ranging from Rs3,411 to Rs3,705 per mmBtu.
For indigenous gas, Nepra projected a gas price of Rs1,103 per mmBtu for the power-purchase price. It represents a 5% increase from the current prevailing price of Rs1,050 per mmBtu.
The exchange rate assumed is 286 rupees to the dollar, the furnace oil price is Rs110,000 per tonne, the average imported coal price is Rs1,951 per mmBtu, and the local coal price is Rs1,220 per mmBtu.
