POWER-generation companies (Gencos) in Pakistan play a pivotal role in the critical sector. Recently, the government has expressed its intention to privatise Gencos, which constitute a vital part of the public-sector energy infrastructure in the country.

It is worth noting that the generation of electricity by these government-owned Gencos is among the most cost-effective in Pakistan. The National Transmission and Despatch Company (NTDC), operating under the Ministry of Energy, plays a crucial role in this context. NTDC releases a public document known as the ‘merit order’ twice a month. This document outlines the priority order for dispatching electricity based on cost-effectiveness.

According to the latest merit order issued by NTDC for April, Genco-II Guddu ranks among the 10 cheapest Gencos in Pakistan. This ranking reflects the efficient and cost-effective generation practices adopted by Genco-II. The generation cost per unit for Genco-II, as per the April merit order, stands at approximately Rs10. This cost is significantly lower compared to many private power houses that generate electricity at higher costs.

It is crucial to highlight the significance of efficient and affordable generation by Gencos, particularly Genco-II. The affordability of electricity generated by these public-sector entities directly impacts the daily lives and economic activities of the public. Given the current energy landscape where private power houses often produce electricity at higher costs, the cost-effectiveness of Gencos like Genco -II becomes even more noteworthy.

In the light of these facts, the govern- ment should carefully review the merit orders issued by NTDC. These merit orders serve as a valuable indicator of the cost-effectiveness of power generation in Pakistan. It is imperative to consider the best interests of the public before proceeding with the privatisation of Gencos.

Preserving and strengthening efficient and affordable generation capacity of public-sector entities will contribute significantly to the critical target of ensuring stable and relatively affordable electricity supply to people across the board.

Khalid Bahalkani
Kashmore

Published in Dawn, May 3rd, 2024