THE year was 1978. Javed Kayani, 15, had just finished high school and decided to partner with family friends to set up a company to produce textile made-ups for global brands like Habitat and Ikea.

They started with 24 looms in Kasur, and over the next eight years, had also established a spinning mill. The textile business was doing well when the company decided to diversify into sugar in 1990 by establishing Chanar Sugar Mills.

Sixteen years later, the partners decided to split up. Kayani got the sugar mill, while the textile business went to his partners.

Another eight years down the road, and he has turned his sugar factory into the most energy-efficient plant in Pakistan. Investment in new technology has cost him around half a billion rupees in the last three years, but is saving him larger quantities of bagasse, a byproduct of sugarcane crushing.

It has also enabled Kayani, who chose doing business because of its unlimited potential for growth, to plan an investment of another three billion rupees in co-generation of 40 megawatts of electricity using bagasse and coal over the next two years.

“Bagasse as a fuel for power generation will be available only during the sugar harvest season. Unless we have arrangements in place to operate the power plant on coal when bagasse is not available, the generation capacity will remain unutilised during the rest of the year,” Kayani, who led the Pakistan Sugar Mills Association once as its central and twice as its Punjab chairman, told Dawn in an interview last week.

“Keeping the power plant shut for more than half a year for lack of fuel doesn’t make any business sense. It is also not in the interest of the country, as the economy and the people are in the grip of severe energy shortages,” he says, attributing his success to his habit of honouring all his commitments even if it means losing money.

The National Electric Power Regulatory Authority has determined bagasse-only generation tariff at $0.104 a unit, but it is yet to announce the price for co-generation from bagasse and coal.

This is delaying the sugar industry’s investment in power generation. Once the tariff is determined, the industry plans to set up a co-generation capacity of more than 2,000MW, which will go a long way in mitigating the nation’s energy woes.

Kayani, who went to London to study finance and security markets after graduation from F.C. College in Lahore, says he opted for the sugar business because he found it “challenging with huge scope for diversification and value addition” to its byproducts — bagasse and molasses. However, he isn’t happy with the misperception of the sugar industry, mainly in the media.

“Ours is the most regulated industry in the country. The prices of our input — cane — and our product — sugar — are determined and regulated by the government, while the price of sugar remains at the mercy of the market. We cannot refuse to shut down our plants until we have crushed the last stick of cane even if we are losing money.

“We are self-dependent in energy; transfer billions of rupees to the rural economy; provide 100,000 direct jobs; save $2.5bn on sugar import substitution; fetch almost $1bn in [sugar, molasses and ethanol] export revenue; and yet we are stigmatised as a mafia,” he contends.

“For the last three years, we have been producing surplus sugar and our prices are stable at the same level, vindicating us from charges of cartelisation. Still, you accuse us of manipulating prices? It’s regrettable.”

Unlike in Pakistan, sugar is a byproduct of cane harvest in other countries. “It is because we have not been able to invest enough money in new technologies. India has adopted far superior technologies as compared to us,” Kayani says.

“Our industry is evolving. We are replacing low pressure boilers with high pressure boilers imported from India and our factories are diversifying. Besides going into co-generation, some millers are also setting up plants to convert molasses into ethanol. Sugar will become a byproduct for us as well once the old technology is replaced.”

Nevertheless, he insists, the government’s role in helping the industry in its evolutionary process is crucial. The government can do many things. It can determine a minimum sale price of sugar based on input costs, and it can set up a Sugar Development Fund on the pattern of India, with contributions from mills to be used for providing the industry free or low-cost loans for BMR, and value-addition.

The government can implement its previous decision to blend 10pc ethanol with petrol, which will not only save foreign exchange of $1.5bn on oil imports, but also create incentives for industry to convert molasses into fuel.

Lastly, it can take the timely decision to allow export and import of sweetener to avoid losses to manufacturers in times of surplus and shortages in the market.

“These measures and creation of buffer stock need to be implemented to treat all stakeholders — growers, industry and consumers — equally. The industry must be allowed to earn a reasonable return on investment so that it can expand, diversify and boost exports. It isn’t an illegitimate demand. Is it,” he asks. Indeed, he has a point.