Cost of electricity production up by 25% owing to rising oil prices


Despite government’s efforts of increasing electricity production in the country, the cost of electricity continues to increase. In January alone, the cost of electricity production increased by 25% when compared to December. The price hike has been due to heavy reliance on production through gas/oil fired plants as opposed to that from hydroelectric plants. Analysts say that heavy reliance on gas/oil powered plants has been due to water shortage in the winter months.

The overall cost of electricity production in January 2017 was Rs. 6.39 per KWH compared with Rs. 5.13 in December 2016. The cost is higher still compared with January 2016 where per unit cost stood at Rs. 5.53.

According to statistics stated by National Electric Power Regulatory Authority (NEPRA),the total share of power produced by furnace-oil based power plants was 43% or 3,005 GWH in January 2017, increasing from 37.13% or 2,673 GWH in December 2016. In January 2016, production share for furnace oil based power plants stood at 50% or 3,387 GWH.

Hydroelectric power stations’ share fell to 7.40% in January 2017 compared with 22.82% in December 2016. In January 2016 however, production share was higher for hydroelectric power stations, at 12%. The share for hydroelectric dams was even higher in November 2016 at 41%.

In addition, nuclear power’s share doubled to 8% in January 2017, compared to 4% in January 2016 (4%). Nuclear power’s share in December was 6%.The increase in overall nuclear power production was due to the 340 MW Chashma-III power plant which became operational in December 2016.

Diesel based power production- the most expensive means of power production also saw an increase in January 2017. Its share in electricity production stood at 5% with Rs. 13.71 per KWH in January this year. In December 2016 production stood at 0.84% and cost Rs. 12.03 per KWH.

Furnace oil, on the other hand, cost Rs. 8.83 per KWH in January 2017, making it the second most expensive source of electricity production after diesel.

 The first 7 months of the financial year 2016-2017 saw overall electricity generation in Pakistan rise by 4%. Furnace oil based plants and Hydels accounted for a total of 62% of power produced with both of them having a 31% share.