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JS Securities Limited – JS Research (September 21, 2022)

Karachi, September 21, 2022 (PPI-OT): Power generation declines 11% YoY in 2MFY23

Total Power generation for the month of August was recorded at 14,053GWh which is nearly 13% lower on a YoY basis and about 1% lower on a sequential MoM basis. Incorporating the latest numbers, the total generation for 2MFY23 lands at 28,203GWh, nearly 11% lower than what was seen during the same period last year.

A noticeable change was seen in the share of Furnace Oil (FO) which decreased from 10% during 2MFY22 to 7% in 2MFY23. On the flip side, the share of Hydel in the fuel mix increased by 4ppt YoY.

FCA adjustment for Aug-2022 reduces sequentially over generation from cheaper sources such as Hydel and Nuclear, replacing expensive sources such as FO and RLNG.

Total generation declines in Aug-22 (-13% YoY, -1% MoM)

National Electric Power Regulatory Authority (NEPRA) reported a total of 14,053GWh of power generated for Aug-22 reflecting a decline of 13% YoY. Hydel continued to gain its share in the energy mix and contributed 5,354 GWh (38% of the mix) towards total power production last month, effectively making it the single most popular source.

This was followed by Coal generation with 2,163 GWh (15%) of power produced. It must be noted that in Aug-22 FO generation was only 7% of the total energy mix. Nuclear and RLNG contributed a total of 3,630GWh last month (~13% each). On a sequential basis, total power generation declined by 1% MoM. This was largely driven by a 17% MoM decline in RLNG based production and a 10% MoM decline in Gas based production owing to shortage of gas in the country. Total generation for 2MFY23 decreased by 11% YoY to 28,203GWh.

FO fades out; down 37% YoY in August

As per the latest data, FO represented just 7% of the energy mix in Aug-22 with a production of 1,021GWh, down 37% YoY. It should be noted that Jul-22 was even lower for FO based production, cumulatively in 2MFY23, energy generation from FO was down 41% YoY.

Sequential increase in Hydel reduces fuel cost

Average fuel cost during Aug-22 declines by 8% MoM to Rs10.11/KWh over increase in power generation on hydel sources in the last two months. With no High-Speed Diesel (HSD) based production, FO was the most expensive fuel source at Rs35.61/KWh followed by RLNG, which cost Rs24.72/KWh. At Rs20.54/KWh, generation from coal was 2% higher MoM in the latest numbers while Gas-based generation cost 5% more than it did in the preceding month. During 2MFY22 the cost of power production averaged at Rs10.55/KWh (up 56% YoY).