Pakistan’s national grid electricity generation fell by another 16 percent year-on-year in May 2023 –the second worst fall in history. At 11.9 billion units – total electricity generation is at par with May of 2018, and only slightly higher than the peak Covid period. On year-to-date basis, electricity generation in May 2023 at 112 billion units is down 10 percent year-on-year. If June does not throw up a big surprise, FY23 power generation will have gone down in double digits year-on-year.

Unlike the previous few months, where cooler temperatures were being cited as the core reason for demand shortfall – May 2023 temperature readings should be enough for the doubters. The countrywide average temperature and daytime temperature was slightly higher than May of last year – making it the top five warmest May in the country’s history. It should not take a rocket scientist to tell that electricity demand will take a hit in times such as these – with eroding purchasing power, reduced industrial output and substantially increased consumer end tariffs.

That said, the age-old load shedding problem stays on even today – despite significantly reduced demand and much improved dependable system capacity. While the overall demand has suffered, daytime peak load still remains way over the system generation, as fuel supply constraints due to variety of reasons, persist.

The generation on 12-month moving average basis is down 10 percent – a 24-month low. Hydel based generation has dealt a big blow to the mix despite the wettest May in63 years. Neelum Jhelum and Tarbela Extension have not contributed a single unit – which means added pressure on other fuels, where the operator is struggling to arrange for timely fuel, as paucity of dollar remains a valid concern. May’s hydel generation was the lowest for any May in five years, adding pressure on other imported fuels, which are way pricier – and that shows in the required increase in lieu of monthly fuel charges adjustment.

Average fuel cost of Rs10/unit is Rs2/unit over the reference fuel cost for the period, which is already 33 percent higher than the same period last year. The FCA for May is highest since July 2022, and with more quarterly adjustments in line – and another likely round of base tariff revisions under the IMF eye – expect more trouble in terms of sustained demand generation. The system frequency fluctuations could rise as tariffs go higher and demand is tested once again. No amount of tariff revision has ever and will ever solve the mess that is Pakistan’s power sector. But they already know it.