Jitters in Sindh as CPPs gas cutoff deadline looms

Published February 28, 2021
Industrialists of Hyderabad and Jamshoro districts are caught between a rock and a hard place as the deadline of March 1 for disconnection of gas supply to captive power plants (CPPs) of export industry nears. — File photo
Industrialists of Hyderabad and Jamshoro districts are caught between a rock and a hard place as the deadline of March 1 for disconnection of gas supply to captive power plants (CPPs) of export industry nears. — File photo

HYDERABAD: Industrialists of Hyderabad and Jamshoro districts are caught between a rock and a hard place as the deadline of March 1 for disconnection of gas supply to captive power plants (CPPs) of export industry nears.

A decision to this effect was announced by the federal government in January.

Mian Tauqir Tariq is one such industrialist who doesn’t have grid supply at his textile units while he rates national grid supply as totally unreliable that would cost him dearly. He does have a co-generation plant. “Not just me only, but there are plenty of industrialists who face a difficult situation nowadays as March 1 deadline for gas disconnection remains effective as of today,” he told Dawn.

He foresees layoffs if industrialists are forced to switch over to unreliable grid electricity which is unavailable in most places or marred by fluctuations only to undermine production.

“When industrialists having their CPPs seek grid supply they will have to bear financial losses as I am sure desired grid supply won’t be available. We can’t stop staff salaries. So, what we will do to overcome losses while we produce nothing. Therefore, we fear thousands of workers will lose jobs,” he contended.

He said the entire industry would be forced to obtain expensive connections from distribution companies and CPP investment will be wasted.

Industrialists believed the government might extend deadline for CPPs to apply power companies for load enhancement till March 31.

According to Adeel Siddiqui, Hyderabad-based vice-president of the Federation of Pakistan Chambers of Commerce and Industry, millions were invested in CPPs. For 1MW of energy, he said, an engine worth Rs60 million is needed. “Each CPP has two engines. An investment of at least Rs100m is there roughly in each case,” he said.“We need uninterrupted supply for work. If we are required to switch over to fragile national grid it means we will be bracing for monetary losses,” he said. He, however, doesn’t rule out layoffs in factories as managements will not be able to meet cost of production and simultaneously pay salaries without making profits.

Mr Tariq subscribed to his view saying, it is tantamount to eroding investors’ confidence. CPPs produce energy through self-generation by burning gas. Such plants usually have 35pc-48pc energy efficiency rate while the government wants CPPs to have 60pc plus efficiency rate as consumption of scarce resource of natural gas in inefficient CPPs is a national loss.

The 60pc efficiency is possible in co-generation plants, according to industrialists. Through such plant, exhaust heat runoff is diverted to recovery boilers for conversion of steam which then produces energy.Under government’s decision industry having co-generation plant with 60pc efficiency is to face audit by National Energy Efficiency Conservation Agency (NEECA). Gas supplies to CPPs would not be discontinued till they apply for enhancement of load and gets grid supply.

“We can’t work sans CPPs as grid supply is unreliable. Our machinery can’t sustain frequent jerks in grid supply. It will damage equipment,” Mr Tariq argued. “How can we rely on power companies whose fragile network is not upgraded yet and can’t ensure uninterrupted supply to us?” he quipped.

The Cabinet Committee on Energy (CCoE) has required CPPs to seek enhancement of load from power companies. Industrialists said that CCoE’s decision was taken without proper consultation and based on assumptions.

Local non-export industry suffered 25pc revenue losses in January following discontinuity of gas supply but it was later restored after business community’s cry, said Mr Tariq, who is patron of Kotri Association of Trade and Industry (KATI) and Jamshoro Chamber of Commerce and Industry (JCCI)Around 60 big industrial units of textile, spinning and weaving are functioning in Jamshoro alone and produce exportable commodities. They are dependent on gas supply with own CPPs, while rest of 100-120 smaller units hooked to national grid.

Hyderabad Electric Supply Company (Hesco) — the power utility which is to provide grid supply in entire lower Sindh region — is unable to meet electricity demand of domestic consumers what to talk of meeting industrial needs. Its electricity network has been a menace for consumers every summer and monsoon season. Hesco fails to provide power during rainfall and consumers bear prolonged outages.

Pakistan has lately witnessing surplus power generation as multiple number of power plants have come on line under China Pakistan Economic Corridor (CPEC) yet power outages remained unending. Even during peak winter when electricity demand drops significantly loadshedding was given effect.

Published in Dawn, February 28th, 2021

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