National Electric Power Regulatory Authority (Nepra) in its State of Industry Report 2019, has said that the power sector is under extreme financial pressure due to high cost of electricity supply and poor performance of distribution sector. High cost of electricity has caused decrease in energy sales, which has resulted in higher cost for the end-consumers; further decreasing energy usage.
Two main factors have been pointed out which are exacerbating the issue. High cost of energy production and high distribution losses.
Distribution losses and recovery ratio have stayed where they were about five years back. For this purpose steps need to be taken on immediate basis to increase recoveries and decrease distribution losses.
Another factor causing increase in price of energy is the high cost of production. For instance RLNG based power plants have long-term supply contracts. These more expensive plants are required to operate in preference over other cheaper power plants. As a result, system operator is required to compromise overall economic merit order operation of power generation plants most of the times.
Utilization of renewable energy for instance wind and solar or combination of hydro and solar have proven to be cheaper and more reliable than RLNG based power plants.
The regulatory authority must take immediate steps to handle the prevailing deteriorating conditions.
