Cost of electricity generation declines by 18% in August, amid rising electricity bills

The cost of power generation saw a significant decline of nearly 18% in August 2023, offering a glimmer of relief to consumers grappling with rising electricity bills.

According to Arif Habib Limited (AHL), a brokerage house, the average cost of electricity generation in August dropped to Rs8.27 per kilowatt-hour (KWh), down from the previous year's average of Rs10.06/KWh, marking a substantial year-on-year decline of 17.8%.

AHL attributed this remarkable reduction in costs to various factors, including a decrease in expenses related to coal, furnace oil (FO), and re-gasified liquefied natural gas (RLNG)-based generation.

Furthermore, they noted an impressive year-on-year increase of 106% in wind-based generation,14% in solar-based generation, 12% in hydel-based generation, and 9% in nuclear-based generation.

Despite this encouraging trend in power generation costs, many Pakistanis are still grappling with high electricity bills, adding to their financial woes amid persistent inflation and sluggish economic activity.

It is notable that in August 2023, Pakistan's total power generation reached 15,959 gigawatt-hours (GWh), equivalent to 21,451 megawatts (MW), reflecting a substantial 13.6% increase compared to the same period last year when power generation stood at 14,053 GWh (18,888 MW).

This year-on-year surge in power generation can be largely attributed to hydel-based sources, which achieved an all-time high of 6,006 GWh in August 2023, marking a 12% year-on-year increase, as reported by AHL.

Contributing to this growth were improved re-gasified liquefied natural gas (RLNG) generation, showing a remarkable 56.1% year-on-year increase, coal-based generation rising by 9%, and nuclear-based generation increasing by 8.9%.

Similarly, wind-based power generation, a renewable energy source, contributed 805 GWh in August 2023, marking an impressive 106% year-on-year increase.

On a monthly basis, power generation improved by 7.5% compared to the 14,839 GWh recorded in July, indicating a positive trajectory for the energy sector.