A 660MW coal-fired power plant in Pakistan, commissioned in May, is currently operating at just 6% of its capacity. The findings, released by the Institute for Energy Economics and Financial Analysis (IEEFA), highlight underlying issues with electricity demand and the structure of Pakistan’s power sector.
Plant Performance and Grid Surplus
The Jamshoro plant, located in Sindh province, received international financing with the Asian Development Bank leading the effort. Despite the investment, the plant’s low operational rate coincides with a current surplus of 10–12GW on the national grid, according to IEEFA. This suggests a significant mismatch between available power generation and actual demand.
The plant’s limited use is also impacting coal import figures. Data from Kpler indicates Pakistan’s coal imports are expected to remain stable in December, around 4 million tons, similar to levels seen the previous year. This stagnation suggests a constrained need for further coal procurement.
Financial Implications and Future Plans
IEEFA’s report points to a troubling cycle: low utilization rates necessitate increased power tariffs to cover fixed ‘capacity charges’ – payments made to generators regardless of how much electricity they produce. This financial strain is further compounded by recent decisions regarding the Jamshoro facility.
Jamshoro Power has abandoned plans to add an additional 660MW coal-fired unit to the complex, which also houses 880MW of gas- and oil-fired plants. The company cited a lack of funding as the reason for dropping the generating license for the second coal unit, as noted in a notice from power regulator Nepra.
Furthermore, the company has proposed de-licensing its four existing oil-fired generation units, representing a combined capacity of 880MW.
Frequently Asked Questions
What is causing the low operational rate at the Jamshoro plant?
The Institute for Energy Economics and Financial Analysis (IEEFA) attributes the low rate to weak electricity demand and broader structural challenges within Pakistan’s power sector.
What are ‘capacity charges’?
Capacity payments are fixed charges owed to power generators, regardless of the amount of electricity they actually produce, according to IEEFA. These charges are intended to ensure generators remain available, but can increase costs when plants operate at low capacity.
What could happen next with the Jamshoro facility?
It is possible that Jamshoro Power will focus on optimizing the performance of its existing 660MW coal-fired unit and the 880MW of gas- and oil-fired plants. The company may also pursue alternative funding sources for future expansion, though this is not currently indicated. A further reduction in overall generation capacity is also a possible next step if the de-licensing of the oil-fired units is approved.
Given these developments, how might Pakistan address the balance between energy supply, demand, and financial sustainability in its power sector?
