ISLAMABAD, June 18: The government is expected to allow sugar mills to use furnace oil as co-fuel for power production to overcome the worst ever energy crisis in country’s history. The sugar industry can produce about 2000MW electricity in five years.

An earlier initiative by the government to utilise sugar industry’s capacity for power generation about two years ago had failed to materialise because of gas shortages and the government did not consider furnace oil as an alternative fuel at that time. The electricity shortage has become acute now and the government is ready to purchase it at higher tariffs.

“The government is making every effort to fill the energy gap,” said Minister for Industries and Production Jahangir Khan Tareen here on Monday at meeting with Pakistan Sugar Mills Association (PSMA). The meeting was called to discuss the feasibility of power co-generation by the sugar mills. Mr Tareen himself is a producer of sugar and sugarcane.The scheme envisages use of bagasse (dry pulp) for power generation during the sugarcane crushing season that lasts six months (November-April). For the remaining six months, furnace oil would be used as an alternative fuel. Earlier, gas was considered an alternative fuel but no breakthrough could be achieved.

A senior government official, who attended the meeting, told Dawn that the government had announced a “national power policy for sugar industry” in November 2005 but it could not take off mainly because of unavailability of natural gas, which was to be used as alternative fuel with bagasse.

He said the government wanted to start working immediately on the subject so that sugarcane crushing season of 2008-09 (November-April) could be used for power generation because replacement of boilers and generators of sugar mills would need between 12-18 months once a final go-ahead is given.

He agreed that tariff to be offered by the industry would be higher because of its dependence on furnace oil instead of gas but it would be acceptable to the government in a crisis situation. He, however, hastened to add that tariff calculation stage was quite far away and would be decided by the industry, the Water and Power Development Authority (Wapda) and the National Electric Power Regulatory Authority (Nepra). The government, he said, has asked the millers to come back on June 25 with statistics on generation capacity, proposed tariffs and other related matters.

Mr Tareen said the government was focusing on power co-generation by sugar mills as a short gestation period energy source to meet the increasing energy demand in the country.

In November 2005, the economic coordination committee (ECC) of the cabinet had approved a national policy of power co-generation, under which 750mw electricity was to be produced by the selected sugar mills by using bagasse as fuel. For this purpose, generating units of the sugar mills were offered to be treated as separate entities aimed at avoiding taxation ambiguities.