Islamabad: The Ministries of Petroleum and Power have agreed to continue supply of gas to efficient captive power plants (CPPs) and they will issue Terms of Reference in this regard, with the consultation of the industry, within seven days.

The group of industrialists, led by Governor Sindh Imran Ismail, held a detailed session with Special Assistant to the Prime Minister (SAPM) on Petroleum Nadeem Babar and SAPM on Power Tabish Gauhar Friday at Petroleum Division, Ministry of Energy.​ Secretary Petroleum, senior officials of Ministry of Energy, and Managing Director of Sui Southern Gas Company (SSGC) were also present at the meeting. The representatives of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and the presidents of different associations of the industrial areas in Karachi also attended the meeting.

Governor Sindh was assured that no industry would be disconnected from gas supply unless they have an electricity connection to meet their requirements.

Former KCCI President and prominent textile exporter Zubair Motiwala, who was present in the meeting, told The Correspondent that the government agreed not to cut gas supply to those captive power plants which have efficiency rate of over 50%. He said the Power Division assured them that until and unless transmission and distribution system of K-Electric and other distribution companies (DISCOs) are not upgraded to meet the electricity demand of the industry, gas supply will be continued to the captive plants.

“Right now our cost of electricity through captive plants is Rs 11 per unit, whereas through the national grid, the cost of electricity is Rs 14 per unit, which is not a viable option,” he said. Motiwala said the cost of production of textile sector and other industries is already high because of expensive electricity, and a further increase in tariff can hurt the exports, which are showing signs of growth after a long time.

SAPM on Power Tabish Gauhar informed the forum that Pakistan has an overcapacity in terms of power generation, and circular debt is a basic economy issue; connecting the industries with national grid would help to reduce the burden of take-or-pay charges on the government.​

Furthermore, he said that the incumbent government had announced the electricity tariff support package, whereby all industries would be provided a discounted rate on power tariffs on incremental usage of electricity for the next three years. He added that the present government was bringing improvement in the power sector through bold policy decisions.

Gauhar also said that the DISCOs would expeditiously process new connections and load enhancement applications for industries, and ensure quality of supply to the industry.

SAPM on Petroleum Nadeem Babar said that the decision is based on the fact that consumption of scarce natural gas in inefficient CPPs was a big national loss. On the other hand, the surplus power generation capacity could be absorbed in these industrial units at competitive rates and reliable supplies. He informed the participants that the issue of gas supplies to CPPs had been under discussion for the last ten years. He added that the allocation management policy of 2005 clearly stated that the gas supplies to CPPs would be made as available, after meeting the requirement of other consumers. He said that eventhe new policy exempted captive units with co-generation, since they have much higher combined efficiency.

Babar also assured the meeting that industrial units, which are not currently connected to the power grid or have electrical connections that are sufficient for their needs, would not be disconnected immediately. He said that the government would request them to shift from gas-based captive power generation to the national power grid by December of this year.

At the conclusion, the Governor Sindh urged that joint efforts by the industrialists and the federal government would ramp up the progress and development of the country.

Hamza Habib is a senior journalist and former editor of correspondent.pk who has previously worked for leading newspapers and TV networks of the country. He mainly writes on the economy and political issues.

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