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Pakistan’s power grid owes $1.2 billion to Chinese producers

Pakistan's debt problem

Pakistan has to pay back Rs 360 PKR (around 1.25 billion dollars) to the Chinese power producers, Dawn News reported on Thursday.

It was reported that the Chinese side pleaded to charge PKR 1.83 per unit additional cost from consumers of ex-Wapda distribution companies (Discos) in October.

Pakistan’s National Electric Power Regulatory Authority (Nepra), held a public hearing on the request of the central power purchasing agency (CPPA) for recovering an additional PKR 28.3bn or PKR 1.83 per unit fuel cost adjustment in Discos’ tariffs for electricity consumed in August, noted that a series of cheaper power plants remained unutilized because of transmission constraints, thus adding unnecessary burden on consumers.

As per the Pakistan-based news daily, the power regulatory authority would announce its decision in a few days after analyzing and reconciliation of data.

The CPPA reported that cost in August this year was cheaper at about PKR 8.29 per unit as compared to PKR 9.9 per unit of the same month last year because of higher generation from local resources.

The representatives of the CPPA — a subsidiary of the Power Division and commercial agent of the Discos — reported that payables to Chinese IPPs stood at about Rs360bn but were unaware of the total amount of receivables and default amounts recoverable from public and private sector consumers.

The Nerpa members pointed out that the higher FCA was despite the fact 26 per cent increase in annual base tariff in July this year based on which the reference fuel tariff for the current year had been set.

It was pointed out that about 3,000MW of relatively cheaper electricity in the south — Thar coal, wind and solar — could not be evacuated to consumption centres in the north due to transmission constraints and expensive furnace oil-based plants had to be operated to meet 13 per cent higher demand.

Dawn News reported that consumers in Karachi were charged with heavy load shedding at the same time.

Hydropower generation contributes the highest to the total power grid of Pakistan with 38 per cent, LNG-based power generation at 17.17 stood second, nuclear power generation contributes 12.79 per cent and local coal-based generation gives 10.3 per cent power to Pakistan.

This is the first time that Nepra has started separately reporting the local and imported coal-based power generation which shows a massive difference. In July this year, the cumulative (local and imported) coal-based generation stood at 14.69 per cent compared to 17.75 per cent share in June.

Power supply from domestic gas maintained its downward journey and contributed just 7.60 per cent to the Pakistan grid in August against 7.61 per cent in July, 8.54 per cent in June, 10.35 per cent in May and 12 per cent in April.

Also read: Economic mess in China, Pakistan puts CPEC in doldrums