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Switching over to alternate energy solutions

February 19, 2012

BADLY hit by growing electricity and gas shortages in Punjab, many textile manufacturers are trying to switch over to ‘alternate’ energy solutions to operate their factories even if it means heavy investments and increased running costs.

In Lahore, for instance, Nishat Mills Limited is setting up a large power plant that will use coal, municipal solid waste and agriculture waste – rice husk, cotton stems, etc – to produce steam for its finishing and dyeing processing and 12 megawatt of electricity to keep its machines operative. The $20 million power plant will rid the mill of its dependence on the erratic gas and electricity supply from the state-owned utilities. The project is an attempt by the company to become “energy self-sufficient”.

“We are setting up the plant to primarily produce steam (currently being produced by burning natural gas) for the textile processing. Electricity will be a by-product,” Ahmed Jahangir, executive director of Nishat Mills, told this writer during a recent visit to the factory.

“The completion of the power plant will almost halve our cost of producing steam and generating power from diesel and furnace oil at its current prices during long periods of gas curtailment (by the Sui Northern Gas Pipelines) to the industry,” he said. But it will be double the cost of gas at its current tariff for the industry.

“Though our energy costs will increase, our dependence on erratic gas and power supplies will end once the plant becomes operational,” said Ahmed, adding that the company had decided to make such huge investments in this project in order to ensure that, “we do not lose our buyers due to delays in shipment of orders on account of gas and electricity gas shortages.”

Pakistan is in the grip of serious energy crisis. While some bigger groups have resources to shift to alternate fuels or set up their own power plants, others remain dependent on energy supplies from the state utilities. Ahmed says a couple of other big manufacturers too had set up alternate power plants but those were not efficient enough.

Rana Arif Tauseef, chairman of the Pakistan Textile Exporters Association (PTEA), says some medium sized manufacturers had tried to shift to the alternate fuels like agriculture waste. But the problem is that they do not have enough financial resources to make the required investments, he says. “Therefore, we are forced to close down our factories when we do not have gas.”

The economy is suffering from the lack of electricity and gas, says Ahsan Bashir, chairman of the All Pakistan Textile Manufacturers Association-Punjab. He says textile exports have dropped by 40 per cent in the first six months of the current fiscal to December in quantitative terms. He said the industry has strong apprehensions that country may lose $300 million per month during the second half of the year to June due to shortages of energy the export-oriented textile industry is facing.

“The industry in Punjab is doubly being squeezed. On the one hand, the industry is being denied gas supplies and on the other it is being subjected to eight to 10 hours a day unannounced load shedding,” he adds.

According to the Economic Survey of Pakistan, the growing energy shortages are wiping out two to three per cent of gross domestic product (GDP) growth every year. This means loss of hundreds of thousands of jobs, increase in poverty and erosion of business confidence and investment.

While the economy is suffering because of growing energy shortages, the financial and political problems facing the government are hampering any efforts to turn the situation around. An all-private sector task force set up by Prime Minister Yusuf Raza Gilani on energy has finalised it’s recommendations. The task force has suggested actions for removing supply gaps by importing liquefied natural gas (LNG) and reviving dormant gas fields and measures to prevent wasteful and inefficient use of energy, says Gohar Ejaz, chairman of the task force. He says the private sector wants the government to spend the funds generated from gas development surcharge on building energy infrastructure. “The private sector is also ready to make investments in creating energy infrastructure,” he says.