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Discuss PSX Power Generation & Distribution Sector

Power Generation & Distribution: Power generation up 15%YoY in Apr’18


04 June 2018



BIPL Securities Limited


  • According to the latest report released by NEPRA, power generation in Apr’18 increased by 15%YoY to clock in at 10,135GWh from 8,842GWh SPLY as RLNG and coal-based generation surged.
  • Average cost of generation increased by 6%YoY to clock in at PKR6.1/kWh as hydel generation declined.
  • Generation of IPPs in our universe fell by 20%YoY, with generation from Hub base plant experiencing the greatest decline
  • According to the latest news reports, the circular debt has reached an all time high of PKR573bn, higher than the pre-2013 settlement level of PKR503bn.

 
Power Generation & Distribution: Tackling circular debt




11 June 2018


BIPL Securities Limited

  • According to the latest news reports the circular debt level has reached PKR573bn (1.7% of GDP), higher than the pre-2013 settlement level of PKR503bn (2.2% of GDP) despite the decline in international oil prices in the past three years. Given the limited fiscal space, we expect power subsidies as well as any one-off settlements like that of 2013 seems unlikely. However, if Pakistan enters in another IMF program a partial settlement may be on the cards. We examine the factors that weigh in on further accumulation of circular debt, namely: i) increasing generation, ii) system inefficiencies to keep line losses elevated, iii) low recovery of bills and iv) high cost of generation. In order to sustainably address the issue Pakistan needs to reduce its generation costs as well as improve the transmission network. Until these core issues are addressed we expect circular debt to continue to accumulate to the tune of ~PKR183bn/yr
  • Pakistan faces the chronic issue of circular debt primarily as a result of an antiquated transmission infrastructure, unfavorable energy mix as well as the non-performance of DISCOs. With the upcoming increase in power generation to bridge the demand shortfall we expect the system slippages to exacerbate the issue, whereby according to our calculations circular debt is expected to accumulate to the tune of PKR184bn/yr-208bn/yr in FY19-23. The unsatisfactory performance of DISCOs leads to the build up of circular debt whereby an improvement in recovery and T&D losses by 1% will decrease the circular debt build up by 6.8% and 6.2%, respectively.
  • Historically, higher tariffs for end consumer have led to a decline in recovery as well as a spike in T&D losses. Consequently an increase (decrease) in tariff cannot be taken in isolation as it would result in commensurate increase (decrease) in T&D losses as well as a decline (rise) in recoveries. If the electricity tariff is increased, ceteris paribus, it will result in decline in the accumulation of circular debt. However, such a measure has high social costs associated with it.

 
Power Generation & Distribution: Newly Inducted RLNG Power Plant’s Load Factor has increased to 54%

25 June 2018


Arif Habib Limited


  • Power generation registered a growth of 9.9% YoY to 12,118 GWh (16,287 MW) in May’18, as compared to 11,024 GWh (14,817 MW) during May’17. Major contributors to power generation were RLNG, FO, Hydel, Gas, Coal and Nuclear with a share of 23.9%, 19.3%, 18.3%, 16.3%, 12.1% and 5.4%, respectively. On a MoM basis, generation went up by 19.6%. Whereas during 11MFY18, generation depicted a growth of 11.6% YoY to 107,626 GWh (13,386 MW) compared to 96,400 GWh (11,990 MW) during 11MFY17.
  • The share of RLNG has increased by 16ppts YoY to 23.9% in May’18 compared to 7.8% in May’17. The rise in share of RLNG has increased on the back of higher generation from newly installed plants. The newly inducted RLNG-based plants witnessed a growth of 50% MoM to 1,458 GWh, which translate into load factor of 54% (QATPL: 59%, Haveli Bahadur Shah: 63%, Baloki: 42%).
  • The rising share of coal and RLNG has eaten the share of FO which has declined by 11pps YoY to 19.3% compared to 30.0% during May’17. However, the load factor of Sahiwal coal-based power plants has declined to 65% from 84% in previous month. On the other hand, load factor of Port Qasim Coal Power Plant arrived at 90% compared to 64% in the prior month. Meanwhile the average load factor of Hydel-based generation clocked-in at 43% vis-à-vis 65% during May’17, however it was seen at 30% during Apr’18.

 
Power Generation & Distribution: May ’18 Back to square one

28 June 2018


AKD Securities Limited


  • Electricity generation during May’18 stood at 12.1TwH, up 10%YoY as the onset of summer season led to increased output from hydel sources (18.3%), while demand continued to soar on the back of hot weather and Ramadan. Major contribution of 2.90TwH (23.9%) came from RLNG, where generation on the same was skewed towards the recently commissioned plants (Bhikki, Balloki and Haveli Bahadur Shah combined generating 1.45TwH). However, Furnace Oil, having been regarded as an “expensive” fuel, saw its resurgence occupying the 2nd place with 2.33TwH of energy output (19.3%). HUBCO and KAPCO combined generated ~1.03TwH on FO. Cost wise, FO remained the most expensive source of generation with a per unit cost of PkR12.97 followed by RLNG at PkR9.33. Amongst our IPP universe, KAPCO still remains our top-pick with an attractive dividend yield of 16.8/16.3% for FY18F/19F and a capital upside of 15.8%.
  • Despite heavy claims of completely phasing out Furnace Oil, the GoP seemed to give in ever increasing demand spurred by hot weather and Ramadan. In this regard, FO took the 2nd spot in the overall generation list with 2.33TwH of energy output (19.3%). IPPs made up a major portion of the generation where HUBCO and KAPCO alone generated 1.03TwH of energy. As per our sources, all 4 units of HUBCO were made operational during the latter half of May after a gap of several months as demand crawled upwards. May also witnessed the highest ever generation on newly commissioned RLNG plants at Bhikki, Balloki and Haveli Bahadur Shah, where the 3 combined generated 1.45TwH of energy, while overall generation on RLNG was recorded at 2.90TwH (23.9%). Coal based generation made up 12.3% of the pie at 1.43TwH of electricity output.
  • Energy prices are marking their new highs on geopolitical tensions, and consequently, cost of generation is also moving north with overall per unit cost of PkR6.90/unit. Furnace Oil remained the most expensive source at PkR12.97/unit, followed by RLNG at PkR9.33/unit (barring import). Coal prices, dropping slightly during May’18 kept generation cost lower at PkR6.12/unit vs. PkR6.73/unit in the previous month. Hydel and Nuclear, on the other hand, remained the cheapest sources of generation at PkR0.114/1.02/unit.

 
Power Generation & Distribution: Higher Contribution from RLNG and Coal with Lower Hydel Generation

02 July 2018


WE Financial Services Limited


  • The Power Generation & Distribution Sector expanded not only in generation and transmission capacity but also in terms of distribution. In the last five years, the sector has witnessed 30% growth in installed capacity (standing at 29,573 MW in March 2018 versus 22,812 MW in FY13), whereas generation increased by 2% (recorded at 68,956 GWH in March 2018 versus 68,592 GWH in FY13).
  • In 11MFY18, power generation has depicted 9.8% YoY growth (from 11,024 GWH to 12,118 GWH). However, average consumption by sector has remained static YoY with share of household, commercial, industry and agricultural recorded at 51%, 8% , 25% and 10% respectively.
  • Major Power generation sources are Hydel, Coal, RLNG, Gas and Nuclear where RLNG constitutes a major share surging 3.4x in May-18 from 7.8% to 23.8% YoY. 63% of RLNG was consumed by newly installed power plants namely Bhikki, Haveli-Bhadur Shah, Balloki, Halmore, Orient, Rousch, KAPCO Saif & Sapphire Power plants. The surge in RLNG and Coal came at a cost of decreasing FO demand with the latter declining from 30% to 19% YoY in May 2018.
  • Total installed capacity remained at 29,573 MW till March 2018 and 1700 MW is added in order to meet the surging demand during FY18. With total capacity YTD, the major energy generation sources (FY18) are thermal 64% , no change recorded YoY basis and Hydro which decreased to 27% against 30% in corresponding year.

 
Power Generation & Distribution: Higher Contribution from RLNG and Coal with Lower Hydel Generation

02 July 2018


WE Financial Services Limited


  • The Power Generation & Distribution Sector expanded not only in generation and transmission capacity but also in terms of distribution. In the last five years, the sector has witnessed 30% growth in installed capacity (standing at 29,573 MW in March 2018 versus 22,812 MW in FY13), whereas generation increased by 2% (recorded at 68,956 GWH in March 2018 versus 68,592 GWH in FY13).
  • In 11MFY18, power generation has depicted 9.8% YoY growth (from 11,024 GWH to 12,118 GWH). However, average consumption by sector has remained static YoY with share of household, commercial, industry and agricultural recorded at 51%, 8% , 25% and 10% respectively.
  • Major Power generation sources are Hydel, Coal, RLNG, Gas and Nuclear where RLNG constitutes a major share surging 3.4x in May-18 from 7.8% to 23.8% YoY. 63% of RLNG was consumed by newly installed power plants namely Bhikki, Haveli-Bhadur Shah, Balloki, Halmore, Orient, Rousch, KAPCO Saif & Sapphire Power plants. The surge in RLNG and Coal came at a cost of decreasing FO demand with the latter declining from 30% to 19% YoY in May 2018.
  • Total installed capacity remained at 29,573 MW till March 2018 and 1700 MW is added in order to meet the surging demand during FY18. With total capacity YTD, the major energy generation sources (FY18) are thermal 64% , no change recorded YoY basis and Hydro which decreased to 27% against 30% in corresponding year.

 

Power: Disbursement of payment to IPPs - By Foundation Research​

  • Power division disbursed payment of Rs142bn on Jun 27’2023 to clear outstanding dues of Independent Power Producers (IPPs).
  • In our universe, HUBC, including share of subsidiaries, received largest chunk followed by KAPCO, NPL and NCPL.
  • HUBC received an amount of Rs11.1bn (Rs8.7/sh).
 

Attachments

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Power Generation & Distribution: Finally, Cat is Out of the Bag – By Sherman Research​

  • National Electric Power Regulatory Authority (NEPRA) has finally revealed the Power Purchase Price (PPP) break up which includes much-debated Capacity Purchase Price (CPP) component. This CPP has increased on an annualized basis to a surprising level, constituting major portion of cost of electricity.
  • According to the notification issued on July 14, 2023, NEPRA indicated PPP reference price for FY24 of around Rs22.9 per Kwh which may vary according to the macro-economic factors, international energy prices and power generation.
  • Just to recall, Power Purchase Price (PPP) is the price in which Central Power Purchasing Agency (CPPA-G) supply electricity to the Distribution Companies (DISCOS) and mainly constitute Energy Purchase Price (EPP) and Capacity Purchase Price (CPP) after adjusting Transmission & System Charges (NTDC & Others) and Market Operator fees i.e CPPA-G cost
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Attachments

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Power: Rise in generation cost from unfavourable shift in fuel mix – By JS Research​

  • Power generation registered a slight increase of 2% MoM toclock in at 7,726 GWh (10,733 MW) during Dec-23. While the uptick wasregistered on a low base as power generation recorded an almost 3-year low inNov-2023, the generation levels remain close to the low.
  • Major contributors during the month were Hydel, Coal andNuclear with generation mix of 24%/22%/19, respectively. The share in power mixfor Hydel dropped from 37% recorded in Nov-2023, where the highest increase inmix was in the RLNG segment (up from 11% to 16% on MoM basis).
  • As a result, average cost of generation during the monthstood at Rs10.13/KWh, increasing 41% MoM. The jump broadly stems from highershare of expensive sources including RLNG (mix: 16% vs. 11% last month).
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Attachments

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