Zaid Bin Farooq

Pakistan Energy Sector Efficiency- KfW Development Bank Report

Blog Post created by Zaid Bin Farooq Partner on 20-Mar-2017

Recently I came across a German state-owned development Bank report about efficiency of Pakistan's energy sector, the report clearly questioned the claims of Ministry of Power through efficient generation.    

KfW Bank approved the improvement in the power generation capacity of the country in the recent years, but emphasized on the transmission line losses and generation efficiency.  Most emphasis made by the power ministry is due to the addition of three generation plant.  

However, the report also claimed that the existing power plants, which are mostly running on the fossil fuels (furnace oil) have no improvement whatsoever in the efficiency, rather it has decreased.

KfW was intrigued by power ministry's comment that "with a 25 per cent increase in power generation since 2013, we have touched 16 billion units annual generation in 2016, thanks to efficient fuel consumption regime and effective controls".

Together with European partners, KfW is currently involved in the construction of another two hydro-power plants. KfW has also influenced the structures of the Pakistani energy supply system. It played an instrumental role in instigating a reorganization of the state-run energy utility (WAPDA) for example. The KFW said it had special interest in promoting system efficiency and, therefore, decided to analyse such high efficiency gains in a short period based on all figures taken from Power System Statistics 2015-16, 41st Edition Planning Power of NTDC — a subordinate company of the power ministry.

The German bank said that “achieving generation efficiency as high as 25pc is applauding indeed” as the public sector generation increased by 3,243GWh (gigawatt hours) to 16,103GWh in 2016, compared to 12,860GWh in 2013. But the question is: “Was this growth entirely due to efficient fuel consumption regime?”

The KFW said the number of government-owned thermal power stations was 10 in 2013. In 2014, three new units were added to the thermal power station (TPS) Guddu, and TPS Nandipur came on line. This addition does not qualify as efficient fuel consumption regime. “In 2013 and 2016, all these stations have been burning natural gas as a primary fuel,” the bank said.

In contrast, it added, a significant declining trend was seen in the amount of power generated by these three big plants since 2010.

All these stations have been rehabilitated under a USAID programme in recent years and yet produced significantly fewer units in 2016 than in 2010.

The research paper said the TPS Guddu (1,655MW — Pakistan’s largest thermal power station) had been generating fewer units since 2010 or even in 2012. In fact, it generated even fewer units in 2016 than in 2015. “This station simply cannot be presented as an icon of performance,” it said, adding that the TPS Guddu produced more than 7,000GWh in 2010, which declined to 5,000GWh in 2013. It produced about 3,500GWh in 2016.

On the other hand, the TPS Muzaffargarh (1,350MW) could generate over 5,000GWh in 2014, but fell off the bar in 2015 only to surface a little above the bar again in 2016. Still its generation remains far below the benchmark year of 2010.

According to the German bank, the TPS Jamshoro (850MW) showed a bit of success in 2014, a dip below that line in 2015, and struggling again to reach up to a 4,000GWh mark. The plant had shown an increase of only 675GWh (rather than 3,243GWh) since 2013, which could possibly be attributed to “efficient fuel consumption regime and effective controls”, it said.

The KFW said the increase in generation came from two additions to the system, generating 1,246GWh, as well as another 1,322GWh from the Nandipur power station.

“Construction of all these units began before 2013. They became operational recently and hence the performance of these new plants cannot be taken as an example of efficient fuel consumption regime and effective controls,” the KFW asserted.

It said that such an announcement by “a technical ministry may be politically influenced”, but this should not undermine the importance of introducing better overall management in Gencos (generation companies) for optimising the much-needed efficiency. “After their useful life, these fossil-fuel-burning plants need to be retired in favour of more efficient, preferably renewable energy plants,” the KFW study concluded.