Power cost down 40pc as new govt diverts gas to efficient plants

[Edevelop]

LAHORE - The average electricity production cost has reduced by around 40 per cent in the short run from Rs14 to Rs8.5, as the new government has started implementation of ‘Merit Order’ strictly by supplying available gas to the most efficient power generation plants, which considerably reduced the average cost of electricity, reveals the latest figures of thermal and hydel power generation.
Though the same is not sustainable in the long-run due to seasonal effects of hydel-power, but it will remain well much below Rs14. Energy experts are of the view that though the new government is trying to resolve the issue of circular-debt, it will take a long time to restore the confidence of investors with renewal of its commitment with IPPs on their financial and contractual issues, otherwise the establishment of new power plants by private sector is unlikely to be seen in the future due to poor track record of PPP-led govt.
They observed that the PPP coalition government not only failed to settle financial issues and energy crisis in the country but it damaged investors’ confidence badly through dishonoring its own sovereign guarantee besides producing expensive power by using less efficient plants and delaying payments unnecessarily. Treating it as a priority and imperative for turning around the economy, the PML-N govt decided to restore the strategic value of sovereign guarantees which was called every month and was dishonoured every month too in the last regime due to its careless attitude towards power sector. According to sources of Finance Ministry, the newly settled federal government had to bear Rs45.63 billion additionally on the account of bank interest due to non-payment of the dues to IPPs by the previous government during last couple of years.
Disregard of this guarantee has caused dent to financial credibility of the state and the investors who were seeing Pakistan as potential market to capitalize their money in the power sector stayed away from investing in Pakistan. The present regime, however, seems to be taking all these issues seriously and has already started taking a number of steps to put the national economy on a progress path. They have started consulting with various chambers of commerce, industries, business groups and large industrialists. Some critics are of the view that paying for the already consumed electricity was inevitable or that clearing of the circular debt was a pre-requisite to go to IMF. Whatever the reason, it was a brave step and prudent financial management demonstrated by the present regime as it had a direct effect on enhancing confidence amongst the foreign investors, which helped increase foreign investment in the last few months. It also affected stock market capitalization which is increasing due to foreign fund managers.
The present regime appears to be on the right path. However, time will tell to what extent has it succeeded in overcoming the issues. It is also sad to see that a few people, loyal to the previous regimes, are inherently critical and unappreciative and are coming up with conspiracy theories to attract the attention of the general public.
One of such false and baseless stories was that Mian Mansha is the largest beneficiary of circular debt payments. There was a large hue and cry about it and even few anonymous letters were circulated in the National Assembly on the subject. Allegations were levelled against him which proved to be only concocted stories once checked. For example, the circular debt payment details on the Ministry of Finance’s website indicate that the share of receipt of Nishat Group’s IPPs was Rs25.5 billion out of the total Rs480 paid to energy sector, which is just about 5% of the total.
Another example of such false rumors is allegation that Mr Mansha acquired a large number of PIA’s shares. When cross-checked from CDC and the market it proved to be false. The list of conspiracy theories and allegations against Mansha and various others is too long and one can go on, but the objective here is not to defend Mr Mansha. He is the largest private sector employer, exporter, taxpayer etc; who also attracted large foreign investment and is running most of the KSE-30 blue chips companies giving dividend each quarter to thousands of shareholders.
Let the system work. Let democracy continue. Let the independent judiciary work. Among all, let the media investigate and raise questions. Let’s play our role at an individual level. Let’s discourage and identify individuals who don’t pay taxes, steal electricity and waste natural resources.

Power cost down 40pc as new govt diverts gas to efficient plants

 

[Nishan_101]

I think the next big step should be local manufacturing of Hybrid Articulated Buses for all the cities of Pakistan and having a Bus Rapid Transit System and remove all of the CNG from the whole system of Pakistan Fuel...

 

[Hyde]

I think the next big step should be local manufacturing of Hybrid Articulated Buses for all the cities of Pakistan and having a Bus Rapid Transit System and remove all of the CNG from the whole system of Pakistan Fuel...

And we need to industrialise our nation by developing industrial zones/city in each of 20 major cities of Pakistan and by building a road which connects all these industral cities in one lane for export purposes?

And building 8800mw of nuclear energy by 2030

And building diamer bhasha, bunji and dasu dam within next 10 years for cheaper and reliable energy

And building infrastructure to utilize coal, minerals and gold resources

And raising tax ratio to 20% of GDP and making underground rail network in Karachi, Lahore and Islamabad

All this sounds nice to ears but the reality is we don't have money

 

[Nishan_101]

And we need to industrialise our nation by developing industrial zones/city in each of 20 major cities of Pakistan and by building a road which connects all these industral cities in one lane for export purposes?

And building 8800mw of nuclear energy by 2030

And building diamer bhasha, bunji and dasu dam within next 10 years for cheaper and reliable energy

And building infrastructure to utilize coal, minerals and gold resources

And raising tax ratio to 20% of GDP and making underground rail network in Karachi, Lahore and Islamabad

All this sounds nice to ears but the reality is we don't have money

But we also need Buses too as railway transport system in each city will take time.

 

[ziaulislam]

LAHORE - The average electricity production cost has reduced by around 40 per cent in the short run from Rs14 to Rs8.5, as the new government has started implementation of ‘Merit Order’ strictly by supplying available gas to the most efficient power generation plants, which considerably reduced the average cost of electricity, reveals the latest figures of thermal and hydel power generation.
Though the same is not sustainable in the long-run due to seasonal effects of hydel-power, but it will remain well much below Rs14. Energy experts are of the view that though the new government is trying to resolve the issue of circular-debt, it will take a long time to restore the confidence of investors with renewal of its commitment with IPPs on their financial and contractual issues, otherwise the establishment of new power plants by private sector is unlikely to be seen in the future due to poor track record of PPP-led govt.
They observed that the PPP coalition government not only failed to settle financial issues and energy crisis in the country but it damaged investors’ confidence badly through dishonoring its own sovereign guarantee besides producing expensive power by using less efficient plants and delaying payments unnecessarily. Treating it as a priority and imperative for turning around the economy, the PML-N govt decided to restore the strategic value of sovereign guarantees which was called every month and was dishonoured every month too in the last regime due to its careless attitude towards power sector. According to sources of Finance Ministry, the newly settled federal government had to bear Rs45.63 billion additionally on the account of bank interest due to non-payment of the dues to IPPs by the previous government during last couple of years.
Disregard of this guarantee has caused dent to financial credibility of the state and the investors who were seeing Pakistan as potential market to capitalize their money in the power sector stayed away from investing in Pakistan. The present regime, however, seems to be taking all these issues seriously and has already started taking a number of steps to put the national economy on a progress path. They have started consulting with various chambers of commerce, industries, business groups and large industrialists. Some critics are of the view that paying for the already consumed electricity was inevitable or that clearing of the circular debt was a pre-requisite to go to IMF. Whatever the reason, it was a brave step and prudent financial management demonstrated by the present regime as it had a direct effect on enhancing confidence amongst the foreign investors, which helped increase foreign investment in the last few months. It also affected stock market capitalization which is increasing due to foreign fund managers.
The present regime appears to be on the right path. However, time will tell to what extent has it succeeded in overcoming the issues. It is also sad to see that a few people, loyal to the previous regimes, are inherently critical and unappreciative and are coming up with conspiracy theories to attract the attention of the general public.
One of such false and baseless stories was that Mian Mansha is the largest beneficiary of circular debt payments. There was a large hue and cry about it and even few anonymous letters were circulated in the National Assembly on the subject. Allegations were levelled against him which proved to be only concocted stories once checked. For example, the circular debt payment details on the Ministry of Finance’s website indicate that the share of receipt of Nishat Group’s IPPs was Rs25.5 billion out of the total Rs480 paid to energy sector, which is just about 5% of the total.
Another example of such false rumors is allegation that Mr Mansha acquired a large number of PIA’s shares. When cross-checked from CDC and the market it proved to be false. The list of conspiracy theories and allegations against Mansha and various others is too long and one can go on, but the objective here is not to defend Mr Mansha. He is the largest private sector employer, exporter, taxpayer etc; who also attracted large foreign investment and is running most of the KSE-30 blue chips companies giving dividend each quarter to thousands of shareholders.
Let the system work. Let democracy continue. Let the independent judiciary work. Among all, let the media investigate and raise questions. Let’s play our role at an individual level. Let’s discourage and identify individuals who don’t pay taxes, steal electricity and waste natural resources.

Power cost down 40pc as new govt diverts gas to efficient plants

if the news is true then it doesnt make sense,
if the average cost is 8.5 now then why is govt making electricty even more expensive
the average traiff is already at 9.5 rs..uptil now the govt was crying that average cost is 14 rs so we cant do anything?
i use 280 units per month yet i pay 10 rs/unit and 800rs permonth of surchage(dont know where that money goes)

anywayy hats off to PML N to atleast understanding and following the basics of economy..
hopefully however they should focus more on hydro by working on wapda vision 2025 simultaneously starting bunji,bhasha and dasu that are ready for implementation

 

[Contrarian]

And we need to industrialise our nation by developing industrial zones/city in each of 20 major cities of Pakistan and by building a road which connects all these industral cities in one lane for export purposes?

And building 8800mw of nuclear energy by 2030

And building diamer bhasha, bunji and dasu dam within next 10 years for cheaper and reliable energy

And building infrastructure to utilize coal, minerals and gold resources

And raising tax ratio to 20% of GDP and making underground rail network in Karachi, Lahore and Islamabad

All this sounds nice to ears but the reality is we don't have money

Do you know exactly how expensive underground metro is?
Even China does not build completely underground metro's barring a couple of showcase cities.

India's metro's are also partially underground. Most of the network in cities barring Delhi is above ground.
RoI is very low in completely underground metro networks.

And we need to industrialise our nation by developing industrial zones/city in each of 20 major cities of Pakistan and by building a road which connects all these industral cities in one lane for export purposes?

And building 8800mw of nuclear energy by 2030

And building diamer bhasha, bunji and dasu dam within next 10 years for cheaper and reliable energy

And building infrastructure to utilize coal, minerals and gold resources

And raising tax ratio to 20% of GDP and making underground rail network in Karachi, Lahore and Islamabad

All this sounds nice to ears but the reality is we don't have money

Do you know exactly how expensive underground metro is?
Even China does not build completely underground metro's barring a couple of showcase cities.

India's metro's are also partially underground. Most of the network in cities barring Delhi is above ground.
RoI is very low in completely underground metro networks.

 

[Hyde]

Do you know exactly how expensive underground metro is?
Even China does not build completely underground metro's barring a couple of showcase cities.

India's metro's are also partially underground. Most of the network in cities barring Delhi is above ground.
RoI is very low in completely underground metro networks.



Do you know exactly how expensive underground metro is?
Even China does not build completely underground metro's barring a couple of showcase cities.

India's metro's are also partially underground. Most of the network in cities barring Delhi is above ground.
RoI is very low in completely underground metro networks.

I was talking about day dreams...

Please re-read my post for answer

 

[Argus Panoptes]

LAHORE - The average electricity production cost has reduced by around 40 per cent in the short run from Rs14 to Rs8.5, as the new government has started implementation of ‘Merit Order’ strictly by supplying available gas to the most efficient power generation plants, which considerably reduced the average cost of electricity, reveals the latest figures of thermal and hydel power generation...............
Power cost down 40pc as new govt diverts gas to efficient plants

If the power generation costs are coming down (which they probably are not) then why are huge increases in the power tariff on the way?

Power tariff hike to generate Rs144bn - DAWN.COM

 

[SBD-3]

I think this is more to do with the plants operating on natural gas. Remember that only a portion of our power generation runs on gas.

 

[Contrarian]

If the power generation costs are coming down (which they probably are not) then why are huge increases in the power tariff on the way?

Power tariff hike to generate Rs144bn - DAWN.COM

Because the Govt still loses money.
The govt does not just have to pay the value at which they buy power from the power plants, they also have to wheel that power from the power plants to the households - hundreds and thousands of kms of distribution.

Now couple that distribution with losses(electricity theft) - something unusually high in our part of the world.

In the end it means that those who do pay for electricity, have to pay more to subsidize the losses caused by those who steal electricity.

 

[Argus Panoptes]

Because the Govt still loses money.
The govt does not just have to pay the value at which they buy power from the power plants, they also have to wheel that power from the power plants to the households - hundreds and thousands of kms of distribution.

Now couple that distribution with losses(electricity theft) - something unusually high in our part of the world.

In the end it means that those who do pay for electricity, have to pay more to subsidize the losses caused by those who steal electricity.

Various government departments and the military are themselves the biggest culprits in not paying for the electricity they use, in addition to the rampant theft that you mention.