Title

Fuel based power plants in Pakistan and their possible shift to the alternative energy sources

Degree

Master of Business Administration Executive

Faculty / School

Faculty of Business Administration (FBA)

Year of Award

Spring 2018

Project Type

MBA Executive Research Project

Access Type

Restricted Access

Keywords

Fuel -- Power plants -- Pakistan | Power plants -- Energy sources

Executive Summary

The primary focus of this research was to dive into the changing landscape of power sector in view of the Government's desire to provide cheap cost of electricity to the people of Pakistan so that they have a reasonable cost of living and revive the industrial and manufacturing sector. At this stage the stakeholders in the Power sector are yet to realize the fate of the existing RFO based power plants. Though the initiative of having electricity from alternative sources which are lower in terms of cost per unit appears to be beneficial, in hindsight an analysis of risk vs rewards in this transaction and whether it would remain sustainable, needs to be thought through. With the change in power sector landscape, the RFO based power plants need to rethink through their existing business model and strategy and should give a consideration to convert the technology to make their plants affordable for the Power Purchaser to dispatch and ultimately result in reduction of cost of electricity to the consumers. My findings into the research work revealed the following: In order to have a reliable and continued supply of power, the GOP needs to focus on eliminating corruption and electricity theft. Planning needs to be enhanced to bring more projects online and energy mix needs to be corrected. With aging fleet and low efficiency, the existing RFO based power plants will continue to have a low merit order vs new plants generating on RLNG and coal, hence this would increase their fixed costs high on account of remaining shut for intermittent periods. GOP would use these as peaking load plants as long as base load is achieved. There could be excessive capacity but this could only last for another 3-5 years as GDP growth leads to population growth hence the need for more electricity. To ensure continuous supply of electricity under all load (demand) conditions, there always exists a spinning reserve of 27-30% which Pakistan does not have right now. Spinning reserves provide buffer and hence improve reliability. Meeting demand is not the only criteria. Conversion of RFO based power plants to RLNG or Coal appears only viable as long as it matches the efficiency post conversion for example 60% of RLNG vs 38% for thermal. There are other issues such as huge investment by Owners whereas, challenges are more focused on regulatory side i.e. payment of CPP for the shutdown period and whether revised tariff is economically viable when compared to Power plants built on RLNG or coal. The output of my work is based on extensive research, review of reports and discussion with experts in the Power sector. The report is expected to benefit the stakeholders in the Power sector who need to give a due consideration on managing the energy mix for a sustainable scenario.

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