Latest news with #Rs791
Express Tribune
22-05-2025
- Business
- Express Tribune
Power generation hits 4-year high in April
Listen to article Pakistan's power generation in April 2025 surged to 10,513 gigawatt-hours (GWh), reflecting a robust 22% year-on-year (YoY) and 25% month-on-month (MoM) increase — the highest monthly generation recorded in the past 48 months, according to data published by the National Electric Power Regulatory Authority (NEPRA). "Power generation in April'25 surged by 22% YoY, highest in 48 months, to 10,513 GWh," wrote Arif Habib Limited (AHL). Despite this sharp rise, generation remained broadly aligned with the regulatory reference level, helping produce a positive Fuel Cost Adjustment (FCA) for the month, the first since June 2024. "Shift to expensive fuel mix resulted in the first positive FCA after June 2024," said Research Head of Optimus Capital, Maaz Azam. The uptick in generation is largely attributed to soaring electricity demand, spurred by rising temperatures and reduced reliance by industries on captive power generation. Analysts believe the shift was also influenced by lower grid tariffs, which made national grid electricity more attractive compared to captive sources. "The rise in generation is attributed to increased demand, driven by a reduction in tariffs," said Research Head of AHL, Sana Tawfiq. Cumulative power generation during the first 10 months of the fiscal year 2025 (10MFY25) reached 100,661 GWh, showing a marginal decline of 0.4% YoY from the same period last year. In terms of source-wise contribution, hydropower (hydel) led the mix with 2,306 GWh (22% share), up 11% YoY, followed by re-gasified liquefied natural gas (RLNG) at 2,157 GWh (21%) and nuclear at 1,882 GWh (18%). A notable highlight was the 59% YoY growth in local coal-based generation, which rose to 1,540 GWh, supported by increased utilisation and favourable fuel costs. Conversely, generation from imported coal and natural gas declined by 32% and 26% YoY, respectively, reflecting deliberate cost-cutting and fuel optimisation strategies. Wind and solar energy maintained a combined share of 9.2%, consistent with seasonal patterns, while residual fuel oil (RFO) re-entered the generation mix with 83 GWh at a steep cost of Rs28.77/kWh. From a policy perspective, a significant development in March 2025 was the imposition of a Rs791/mmbtu levy on gas-based captive power plants (CPPs), raising their effective gas tariff to Rs4,291/mmbtu. According to estimates by AKD Securities, this translates into a staggering generation cost of around Rs42/kWh for off-grid captive units operating at 35% thermal efficiency. This steep cost differential prompted many industrial users to switch to relatively cheaper grid electricity, which averaged around Rs28/kWh (excluding taxes and duties). While the fuel cost of power generation rose by 8% YoY to Rs9.92/kWh in April 2025, driven by a heavier reliance on expensive fuels like RLNG and RFO, the average cost of generation actually fell on a MoM and YoY basis. It dropped to Rs8.95/kWh, down 5% YoY and 8% MoM, compared to Rs9.75/kWh in April 2024reflecting improved fuel mix efficiency and lower reliance on imported fuels. According to Optimus Capital Management, the total generation of 10,513 GWh in April was slightly below the reference level of 10,550 GWh, a shortfall of just 0.4%. However, changes in the fuel mix were stark. Hydel power dropped by 28.6% versus its reference (3,228 GWh), while coal-fired generation soared by 48.6%, with imported coal usage jumping 115.1% and local coal rising 22.5%. Meanwhile, RLNG generation grew by 42.1%, and nuclear generation fell by 22.3%. The cost impact of this fuel mix shift was significant. RLNG's contribution to fuel cost jumped to Rs4.98/kWh, up from a reference of Rs3.31/kWh. Local and imported coal together contributed Rs3.30/kWh, while nuclear (Rs0.38/kWh) and hydel (zero marginal cost) remained low-cost contributors. The net result was a positive FCA of Rs1.27/kWh, calculated against a reference fuel cost of Rs7.68/kWh. This marked change in fuel mix, particularly the increased reliance on RLNG and coal, alongside stable generation levels, led to the country's first positive FCA adjustment in 10 months, a noteworthy development for both consumers and the broader energy sector.
Express Tribune
24-04-2025
- Business
- Express Tribune
Relief for industries as PHC stays levy
The Peshawar High Court (PHC) has suspended the imposition and recovery of the newly introduced levy on all industries generating electricity through gas-run generators. A division bench comprising Justice Syed Arshad Ali and Justice Qazi Jawad issued the restraining order on Wednesday. The federal government had imposed the levy through an ordinance promulgated in January 2025, requiring all captive power producers to pay a levy determined by the federal government. However, the cement and textile industries, being among the captive power producers, challenged the ordinance in the PHC, requesting the court to restrain the federal government from notifying the levy rate. The notification was subsequently issued on March 7, 2025, setting the levy at Rs791 per MMbTU. A formal application was moved for the suspension of the notification.
Express Tribune
12-04-2025
- Business
- Express Tribune
IHC lifts bar on collection of gas levy
The Islamabad High Court (IHC) has allowed the government to collect gas levy from captive power plants but barred it from using the money until the ad hoc legislation receives approval of parliament, in an order that addresses the IMF's concerns for now. In its order, the court conditionally lifted its three weeks old stay granted against the recovery of Rs791 per mmBtu gas levy from owners of the factories using gas to produce in-house electricity. The levy has been imposed on the instructions of the IMF to compel industries shift from gas to the national power grid. The government wanted to use the money to reduce the electricity prices by about Rs1 unit in line with an understanding with the IMF. The court released its reserved order after AGP Mansoor Usman Awan through an application sought vacation of the stay under. "Upon consideration of the foregoing, the civil miscellaneous application is hereby allowed, and the interim order is recalled subject to the following express conditions," reads the judge order. The court instructed that "all tax amounts collected from the petitioners under the impugned Ordinance shall be deposited and retained in the Federal Consolidated Fund for the duration of the Ordinance's validity, i.e., 120 days from its promulgation". The court further ruled that the money shall not be appropriated, transferred, or expended for any purpose other than the one provided under the impugned ordinance. The order stated that "in the event that the impugned Ordinance does not receive Parliamentary approval, all sums collected under its authority shall, upon the Ordinance's lapse, be forthwith refunded to the petitioners in full, without deduction or delay". In February, the government had promulgated a Presidential Ordinance to impose off-grid gas levy on these in-house power plants but did not notify the rates. During the IMF talks, it became an issue and on March 7, the government notified a 23% increase in gas rates for industrial captive power plants (CPPs) by imposing a Rs791 per mmBtu grid levy.
Arab News
28-03-2025
- Business
- Arab News
IMF says Pakistan can cut power tariff by one rupee per unit to benefit ‘all consumers'
KARACHI: The International Monetary Fund (IMF) has allowed Pakistan to slash power tariffs by one rupee per kilowatt to provide relief to inflation-hit consumers, the IMF's resident representative in Pakistan confirmed to Arab News on Friday. Pakistan can bring down the prices of electricity by using revenue from a Rs791 per unit grid levy the government recently imposed on the usage of gas by captive power plants for in-house power generation, Mahir Binici, the IMF's resident representative, said. Captive power plants, also known as autoproducers or embedded generation, are electricity generation facilities owned and operated by an industrial or commercial entity solely for their own energy consumption, providing a localized power source. 'The price reduction would benefit all consumers,' Binici said. Analysts see a modest impact of the one rupee relief over the promised Rs8 per unit cut. 'The benefit is modest, around Rs 200 per month, for the average domestic consumer,' said Muhammad Waqas Ghani, head of research at JS Global Capital Ltd. from Karachi. Financing the cut through a levy on captive power plants would naturally provide a short-term relief, he said. 'For the government to provide any meaningful relief, it would have to work to address the underlying structural issues in Pakistan's energy sector,' Ghani said. The confirmation of the power tariff reduction comes days after IMF staff reached a deal with Pakistan for a new $1.3 billion arrangement and also agreed on the first review of the ongoing 37-month bailout program, the IMF said on Tuesday. Pending board approval, Pakistan can unlock the $1.3 billion under a new climate resilience loan program spanning 28 months. It will also free $1 billion for the South Asian nation under its ongoing $7 billion bailout program, which would bring those disbursements to $2 billion. The IMF's board of governors will meet in May and approve its next tranche for Pakistan, Prime Minister Shehbaz Sharif's office said in a statement on Thursday. The IMF's nod for a reduction in Pakistan's power tariffs is just one component of a larger package Sharif will be announcing after Eid, Zafar Yab Khan, a spokesperson at Pakistan's power division, told Arab News. 'This should not be misunderstood as the only relief that is being considered by the government,' Khan said. Under a special relief package, Sharif was expected to announce a reduction in the prices of electricity by as much as Rs8 per unit to provide some relief to Pakistanis who have had to face inflated energy and food prices in the last two years. Pakistan's inflation peaked at 38% in May 2023 before gradually easing to 1.5% in February this year, the lowest in nearly a decade. The government expects it to remain within 1–3% in the coming months. The debt-ridden country had to make its electricity costly by withdrawing fuel subsidies and increasing energy prices in compliance with conditions set by the IMF under a $3 billion loan that averted a sovereign debt default in 2023 but fueled record-high inflation and triggered protests in many parts of the country.
Express Tribune
28-03-2025
- Business
- Express Tribune
Govt seeks NEPRA's nod for Rs1.71 per unit cut in power tariff
Listen to article The federal government has approached the National Electric Power Regulatory Authority (NEPRA) for a reduction in electricity tariffs, following approval from the International Monetary Fund (IMF). The government has proposed a cut of Rs1.71 per unit in electricity prices, which would be facilitated through a tariff subsidy. The power regulatory authority is scheduled to hold a hearing on April 4, Express News reported on Friday. The proposed tariff reduction is intended to apply to all distribution companies, including K-Electric, with the subsidy set to take effect from April to June 2025. The move comes a day after the International Monetary Fund (IMF) said that Pakistan can reduce electricity prices by Rs1 per unit using revenues from the Rs791 per unit levy imposed on gas used in-house for power generation by industries – the only measure the government has secured thus far. This will lower electricity bills by 1.5%, but industries using gas to generate in-house power will have to pay 23% extra for gas to achieve this minimal reduction. Revenues from captive power plant firms can be used to reduce electricity prices by Rs1 per kilowatt, said Mahir Binici, the Resident Representative of the IMF, in a brief statement on Thursday. Binici made the statement a day after Pakistan and the IMF reached a staff-level agreement on the completion of the first review talks. Binici stated that the price reduction would benefit all consumers. However, the Islamabad High Court has already suspended the off-grid gas levy for at least five weeks. Pakistan and the IMF have reached a staff-level agreement for the $1 billion second loan tranche, but the timing of the IMF board meeting remains uncertain. The Rs1 per unit reduction suggests that the government and the IMF anticipate generating about Rs110 billion to Rs120 billion in revenues from the off-grid gas levy. Prime Minister Shehbaz Sharif has long aimed to reduce electricity prices by at least Rs6 to Rs8 per unit. However, the Power Division has yet to present a plan acceptable to the IMF that would result in a significant price cut. Pakistan has also been trying to convince the IMF to allow a reduction in electricity prices based on additional revenues from increased petroleum levies, reduced taxes, and downward revisions in fuel price adjustments and quarterly tariff adjustments. The IMF remains unwilling to lower taxes on electricity bills. It has also not yet communicated whether it will allow the government to use an additional Rs180 billion in revenues from the recent Rs10 per litre hike in the petroleum levy to reduce electricity prices.
