ISLAMABAD, May 17: The government has decided to allow industrial units in all the proposed export processing zones (EPZ) to start self power generation to make local products competitive in the international market.

A formal announcement to this effect would be made by prime minister Mir Zafarullah Khan Jamali when he visits Karachi to unfold incentive package for EPZs.

Informed sources told Dawn that policy makers have agreed that with the current power rates available to industrial and commercial consumers, the industrial units could not compete in the international market.

The industrial units would be allowed to install their own generators and produce power. Some of the industrial units have the inbuilt capability to generate power as a bye-product as they produce their industrial product.

However, the industrial units would not be allowed to sell their surplus power to the adjoining industries and would use their power only for inhouse consumption. The facility would not be available to industrial units which were already in operation or outside EPZs, these sources said.

The sources said that input costs in Pakistan particularly utility charges were the highest and most of the industrialists and foreign investors had told the government that their only reluctance for investments were high utility charges despite huge liquidity available in the market.

This would be second time since 1992 that industrial units would be allowed to start self-generation to meet their power requirements and un-fluctuated supplies.

Their surplus power has been a long unresolved dispute between Wapda, small power producers (SPPs) and the National Electric Power Regulatory Authority (Nepra).

Wapda has been opposing that these SPPs, which are around 60 in number be given a generation license and saying that they should not be allowed to sell their power to the adjoining industrial units.

Wapda and KESC contend that it was unjust to ask these utilities to provide subsidies to the low-income groups and sell electricity to those sections of society who are charged at lower rates like domestic consumers but deprive them from prime consumers where line losses were also minimal.

Because of heavy loadshedding, the government had allowed the industrial units to start self-generation because it was more reliable and cheaper than Wapda’s that was facing acute shortages and resorting to shut downs.

Over 60 industrial units started self-generation to the extent of 600-mw and were also allowed to provide their surplus to the adjoining units.