Pakistan’s power supply had been unreliable for many years in the past. To address this problem, huge investments were made in the recent past for increasing the power generation capacity in Pakistan. As a result, Pakistan’s installed generation capacity witnessed an increase from 22,064 MW in financial year 2010 to 39,772 MW in 2020- 21. That said, it was a challenging year for the country’s power sector, owing to high circular debt, fuel supply shortage and high electricity cost. Meanwhile, last year, Pakistan submitted its revised Nationally Determined Contributions to the United Nations Framework Convention on Climate Change, presenting an ambitious target of 60 per cent share of renewables in the country’s power mix by 2030. Currently, around 30 per cent of its installed capacity comes from renewables (including hydro), while the remaining comes from baseload power plants and nuclear.
A look at the key trends and developments in Pakistan’s power sector…
The total installed generation capacity of the country, as of September 2021 was 39,772 MW, against 38,719 MW in September 2020, showing a net increase of 1,053 MW or 3 per cent. The public sector accounted for around 20.8 GW of capacity, while the private sector contributed 18.9 GW.
Source-wise, the largest share of around 25,098 MW comes from thermal, while the second largest share of 9,915 MW comes from hydro. Renewables account for around 5 per cent of the capacity, with 1,248 MW of wind, 530 MW of solar, 369 MW of bagasse. Nuclear contributes 2,612 MW to the installed capacity.
During 2020-21, the total electricity generation in the country stood at 143,090.64 GWh, compared to 133,727.2 GWh in 2019-20, marking an increase of 9,363.44 GWh or 7 per cent.
The utilisation factor of the combined baseload thermal power plants in the country remained at around 45 per cent of their dependable generation capacity during 2020-21. This low utilisation was attributable to several reasons such as load shedding and low demand due to high electricity prices. Also, the country faced a shortage of regasified liquefied natural gas, which affected the power generation from gas-based power plants in June 2021. Meanwhile, the utilisation of renewable power plants (hydro, wind, solar and bagasse) varied between 15 per cent and 67 per cent of their dependable capacity, during the same period.
For the supply of electricity in Pakistan, 10 state-owned discoms are responsible in their respective areas. These are the Tribal Electric Supply Company (TESCO), Islamabad Electric Supply Company (IESCO), Multan Electric Power Company (MEPCO), Peshawar Electric Power Company (PESCO), Hyderabad Electric Supply Company (HESCO), Sukkur Electric Power Company, Gujranwala Electric Power Company (GEPCO), Lahore Electric Supply Company (LESCO), Faisalabad Electric Supply Company (FESCO) and Quetta Electric Supply Company (QESCO). These discoms distribute electricity across Pakistan under licences granted by the National Electric Power Regulatory Authority (NEPRA) and are responsible for maintaining and operating transmission and distribution assets at the 132 kV and below levels. In addition, K-Electric (KE) owns a distribution licence for supplying electricity in its designated areas. This comprises a distribution network that collectively extends over 37,735 km. The network is supported by 928 grid stations and has a total capacity of 53,263 MVA as it focuses on delivering electricity to end-users.
During 2020-21, HESCO, PESCO, Southern Electric Power Company (SEPCO) and QESCO reported the highest losses, at 38.55 per cent, 38.18 per cent, 35.27 per cent and 27.9 per cent respectively. Meanwhile, the losses of TESCO, GEPCO, FESCO, MEPCO, LESCO and IESCO remained at 9.58 per cent, 9.23 per cent, 9.28 per cent, 14.93 per cent, 11.96 per cent and 8.54 per cent respectively. The actual losses of most of the discoms for financial year 2020-21 remained higher than even the targets of financial year 2019-20.
During financial year 2020-21, IESCO, GEPCO, MEPCO and PESCO reported above 100 per cent recoveries. The worst performers were QESCO, SEPCO, HESCO and TESCO, with 39.8 per cent, 64.48 per cent, 75.63 per cent and 83.27 per cent recoveries respectively. LESCO and FESCO reported 98.72 per cent and 97.3 per cent recoveries during the year.
Meanwhile, during the year, a reduced drawal of power by discoms against their allocated quota, particularly by PESCO, HESCO, SEPCO and QESCO, was witnessed, which resulted in load shedding, despite availability of generation capacity. The daily log reports of the system operator show daily load management/load shedding of around 2,500 MW to 3,000 MW during 2020-21.
The state-owned National Transmission and Despatch Company (NTDC) transmits power between generators and state-owned discoms for running the national electricity transmission system in Pakistan. NTDC’s transmission network is spread all over the country, except for Karachi and surrounding areas. Through its transmission branch, KE serves Karachi and surrounding areas for power transmission needs. Further, the national grid – the backbone of the country’s power system – consists of 500 kV and 220 kV lines and associated grid stations. The 500 kV transmission network extends over 8,059 ckt. km and is supported by 16 grid stations with 30,610 MVA of transformer capacity. The 220 kV transmission network stretches up to 11,438 ckt. km and is supported by 46 grid stations, coupled with a total transformer capacity of 30,440 MVA.
The overall transmission losses for NTDC during 2020-21 stood at 2.78 per cent. The average number of outages per circuit stood at 0.11 during 2020-21. The average outage duration per interconnection point was 0.13 hours during the year.
During 2020-21, one power transformer was added at the 500/220 kV level, while three power transformers were added at the 220/132 kV level in the NTDC system. On January 9, 2021, the NTDC system underwent a major breakdown and the country suddenly plunged into darkness.
Going forward, for evacuation of electric power from power plants in the southern region and its transmission to load centres, the country’s first +660 kV high voltage direct current transmission line is being constructed in the private sector. The project is planned to realise bipolar operation, with a bipolar power transmission capacity of 4,000 MW over a line length of about 886 km, from Matiari (Sindh) to Lahore (Punjab).
In 2021, Pakistan released its new power plan – the Indicative Generation Capacity Expansion Plan (IGCEP) 2030. As per the plan, hydropower generation is the top priority in the IGCEP (2021-30), and its share is expected to increase to 23,035 MW in 2030. The share of local coal projects in installed capacity will also be increasing to 3,630 MW in 2030, as per the IGCEP 2030, while the contribution of imported coal will increase to 4,920 MW during this time. In terms of the installed capacity mix, the share of fossil fuels is set to become 36 per cent in 2030, whereas in terms of the generation mix, the plan projects it to be 23 per cent in 2030.
The country’s carbon emissions are also expected to be reduced. As per the IGCEP 2030, carbon emissions in the country, which accounted for 0.353 kg-CO2 per kWh in 2021, are expected to fall to 0.202 kg-CO2 per kWh by the year 2030, that is, even less than the current average of the Organisation for Economic Cooperation and Development countries.
To this end, Pakistan recently expressed an interest in joining the Asian Development Bank’s Energy Transition Mechanism under which two multi-billion dollar funds are to be established to accelerate the early retirement of fossil fuel-based power generators and to expand renewable capacity respectively. The bank has also provided a technical assistance grant of $300,000 to Pakistan for a pre-feasibility study, which is expected to be complete by the third quarter of 2022.
NEPRA, in its state of the sector report 2021, noted that the country’s circular debt as on September 2021 stood at Rs 22,801.49 billion as compared to Rs 21,504.25 billion a year ago. The increase in the circular debt has been detrimental to the financial viability of the power sector. The high transmission and distribution losses of discoms, lower recovery of the billed amount and non-payment of subsidies in time have been major causes for circular debt accumulation.
During 2020-21, the power generation segment continued to face the challenge of capacity payment for unutilised “take or pay” power generation capacity. On its part, NEPRA has decided to convert the tariff of all old blocks of gencos from “take or pay” to “take and pay” basis, in a bid to reduce capacity payment obligations. NEPRA has also engaged Wapda Hydroelectric to convert the tariff of their old power stations from “take or pay” to “take and pay” basis.
As per the IGCEP 2030, it is crucial for the power sector in Pakistan to undergo structural changes in terms of planning procedures, focusing on enhancement of distributed generation as well as a reduction in the number of large plants, situated at a distance from load centres. Through local manufacturing, a reduction in the price of the energy basket can play a major role in providing relief to the end-consumer, along with savings in terms of foreign exchange. Therefore, along with coordinated planning among various sectors and an integrated energy sector approach, Pakistan can realise an optimal power generation mix from imported fuels and indigenous resources in the years to come.