LAHORE, May 11: Loadshedding can be reduced by 30 per cent if subsidy is offered to bring online 1,083 megawatts of private generation kept offline because of economic reasons, according to experts.

Different industrial units, especially textile factories, have installed private generation plants of 1,083MW across the country. These combined cycle generators can be run both on gas and oil.

But the industries do not generate power because supply from the Pakistan Electric Power Company (Pepco) is cheaper.

The experts said the government should evolve a mechanism to separate the industries from the Pepco system at least for three years.

They said the industries could be paid price differential as subsidy but the government must use the generation capacity to reduce the power shortage.

“A mechanism can be evolved to stop supply from the Pepco system to an industry of the amount of electricity which it can generate and pay the price differential,” said Mohammad Waheed, a former executive engineer of the Punjab electric inspectorate.

The provincial inspectorates issue no-objection certificates and licences for power generations installations and collect electricity duty.

Mr Waheed said the entire power generation system should be documented by the provincial governments.

“The trickiest part will be the calculation of the price differential and the subsidy,” said Mohammad Javed, a former employee of the Pepco finance department.

He said Pepco could form a team of financial and technical experts to ascertain the generation capacity, its mode and cost. He said the amount of subsidy would depend on the mode of generation.

Mr Javed said Pepco would not need a policing mechanism to monitor irregularities after the calculations were made.

Another benefit of applying the mode would be that the government would only have to pay power charges and not the capacity charges to the industries.

The government pays both power and capacity charges to the independent power producers.

“The industries have invested over $1.1 billion in installing the generation capacity according to the $1million per megawatt estimate for IPPs,” said Akbar Sheikh of the All Pakistan Textile Mills Association. The association has demanded that the government should buy power from it. If the government was ready to go for rental power, which would cost Rs11 per unit and take six months for installation, there was hardly any harm in using the installed generation capacity, he said. “The modalities can be worked out by Pepco and the industries,” he said.