KARACHI: The National Electric Power Regulatory Authority (NEPRA) has revealed that the high cost of electricity is one of the main factors affecting the growth rate of economic growth and is responsible for a 0.29% decline in the gross national product in the financial year 2022-23. Became
According to Nepra’s State of the Industry Report 2023, the high cost of electricity in Pakistan is affecting every segment of the society, along with local consumers, commercial, industrial, agri-culture and service sectors are also affected by the high cost of electricity.
The report by Nepra stated that the devaluation of the rupee and the high cost of fuel used to generate electricity are contributing to the rise in electricity prices, with Pakistan relying heavily on imported energy sources, including coal. And oil and gas included, the devaluation of the rupee has increased the import cost of fuel, directly increasing electricity prices and burdening consumers.
According to the report, nuclear and coal-fired plants are the most suitable source of baseload power from an economic point of view, which requires further expansion of coal mine production in Thar and related infrastructure including rail network. It should be built soon. Thar Coal Power Plant is contributing 10% to the energy sector by utilizing its highest production capacity, which can be increased to 15-20% to significantly reduce the cost of electricity.
Commenting on the NEPRA report and the impact of expensive electricity on economic growth, Yousuf M. Farooq, director of research at Chez Securities, said that the situation calls for increased reliance on coal resources, Thar’s coal-fired power plants are indigenous to the country. Coal-fired power plants are the lowest cost power producers. The production cost of electricity from Thar coal is 5 to 7 rupees per kilowatt while the electricity generated from imported coal is costing 15 to 25 rupees per kilowatt.
He said that Pakistan has started generating electricity from Thar coal after a delay of 50 years. In order to make full use of Thar coal, it is necessary that the federal government’s sovereign guarantee and State Bank of Thar’s coal should be used. Instruments should be created for investment in coal.
He said that coal mining requires a lot of capital, it is a high-cost industry, global finance for this sector is almost closed, so the country level to reap the economic benefits from the vast local coal reserves. But public private partnership is the only way.
Yusuf M. Farooq said that in order to fully exploit the coal potential of Thar, it is necessary to create a sovereign fund and promote public-private partnership. He stressed the need for strategic partnership in coal mining to make Pakistan self-sufficient in energy sector and counter the negative effects of the current energy crisis.
