Captive grid

Published March 13, 2025

IT is a common practice: the government makes commitments with global lenders for their money and then tries to wriggle out of them when faced with pressure from powerful lobbies that might be affected. Previously, it would find a way around the agreed reforms. But no longer. On Tuesday, it had to notify a grid levy of Rs791/mmBtu on all supplies of domestic gas and imported LNG to captive power plants as required under the ongoing IMF programme. The policymakers had been delaying the levy under pressure from the wealthy textile lobby but were forced to notify it after the visiting IMF mission, currently scrutinising progress on the present loan agreement, took a “tough stance”.

The new levy raises the gas prices for captive power by 23pc to Rs4,291 and comes on top of the recent increase of Rs500 to meet power sector restructuring benchmarks under the IMF loan. The idea behind making gas supplies expensive for captive power is to discourage cheaper self-generation by the industry, and force it to switch to grid power for its electricity needs to boost consumption of excess grid electricity for long-term power sector viability. The shift will deprive the industries of a cheaper energy source, making exports more expensive. However, it will potentially lead to an average reduction of Rs2 per unit for every consumer linked with the grid, a goal for which Aptma and FPCCI had launched a campaign against the IPPs. Besides, it must force textile exporters to invest in plant efficiencies, and move towards value-added products for higher export earnings. Simultaneously, distribution companies will have to invest in their networks to ensure reliable supplies to industrial users apart from expanding to areas where factories still cannot access the grid. That said, the government needs to urgently come up with a plan to reduce the burden of Rs1.5 per unit on grid users due to its bad rooftop green metering policy for affluent segments of society.

Published in Dawn, March 13th, 2025

Opinion

Seizing the moment

Seizing the moment

The provinces bear the primary responsibility for improving access to family planning services, particularly for poorer families.

Editorial

PIA privatisation
Updated 11 Jul, 2025

PIA privatisation

While it does give the privatisation authorities a much-needed head-start, it will not be sustainable unless preceded by policy and regulatory reforms.
Beyond expectations
11 Jul, 2025

Beyond expectations

THESE are tough times, but the country is lucky enough to still be considered home by a large expatriate workforce,...
Train in vain
11 Jul, 2025

Train in vain

TALK of ‘revival’ of the long-dead Karachi Circular Railway has turned into a running joke for denizens of this...
No negotiations
10 Jul, 2025

No negotiations

IT seems like the appeal from Kot Lakhpat Jail has fallen on deaf ears. “[…] The time for negotiations has...
Speech policing
Updated 10 Jul, 2025

Speech policing

Sweeping accusations have once more exposed just how broadly and arbitrarily Peca is being applied.
Continued detention
10 Jul, 2025

Continued detention

THE continued detention of BYC head Mahrang Baloch and five other activists indicates that the state is uninterested...