LAHORE - The government is creating undue advantage for Captive Power Plants, mostly installed by textile millers, by providing them gas supply at very nominal rates to generate cheap electricity at Rs5.5/kwh while rest of the industry is being charged Rs16/kwh for power utilization.

This was observed by the Lahore Chamber of Commerce and Industry, the representatives of mainly traders and commercial users of electricity, demanding the government to immediately increase the price of natural gas being provided to captive power plants to create a level-playing field for majority of the industry that has no access to power generation through gas.

However, the All Pakistan Textile Mills Association, the representative of the largest industrial body in the province, using around 1,000MW out of total industrial utilization of 1,500MW of power in the province, has rejected increase in electricity tariff for industry, saying it is unprecedented and would lead to a complete collapse. An exorbitant increase in electricity tariff is not less than a death warrant for Punjab-based industry, it said.

APTMA Punjab was of the view that increase in electricity tariff from Rs9.18/kwh to Rs14.82/kwh under the new energy policy is rendering the Punjab-based industry inefficient; as jump of Rs5.63/kwh (61.32 percent) effective from Aug 2013 in one go is a draconian measure against the industry.

According to Association, an average electricity tariff for industry in South Asia region is below 10 cents against 14.4 cents in Pakistan. In actual, he said, tariff cost in China, India, Bangladesh and Sri Lanka is 8.5 cents, 11.3 cents, 7.3 cents and 9.2 cents respectively against 14.75 cents in Pakistan.  The Lahore Chamber, instead of opposing unprecedented hike in power tariff, has strongly recommended that the gas prices to the captive power plants be increased by at least 150 per cent with a view to create parity in cost of electricity which is a major raw material for the industry.

“The rate at which the gas is being provided to industrial units having captive power plants is creating disparity in cost of production and would result in closure of larger chunk of industry in the country. The PEPCO tariff for industry for peak hours is Rs18 /KWH and for off-peak hours it is Rs14/kwh with an average of Rs16/Kwh whereas the units having gas generators are producing power at Rs 5.5 to Rs 6/KWH.”

LCCI President Farooq Iftikhar said that since the state is providing gas to a selected few industries, it is actually creating undue advantage for those having access to gas. Due to shortage of gas in the country it is not possible to provide it to rest of the industry.

He said that what needs to be realized by the policymakers is that making more gas available to power utilities or their IPPs means higher power generation at cheaper rates.

The commercial parity of gas viz-a-viz furnace oil is almost one to four. If 1.25 BCFD of the gas being supplied to CPPs is diverted to main-grid power generation, 4000MW of additional electricity can be produced.

The government, therefore, needs to increase gas price for CPPs by a minimum of 150 per cent to commensurate with the industrial power tariff of utilities so that they use Disco supply — a major source of revenue for public utilities.

A comprehensive and independent audit needs to be carried out on or by the SSGCL and the SNGPL to examine the implementation and violations of the gas policy.

Farooq Iftikhar said that the government should ensure that IPPs get sustained gas supplies as they are much more efficient than the Captive Power plants run by the private sector. At the same time, he stressed that pilferage and theft in the power system should be arrested so that the efficiencies of these IPPs could be availed to the maximum level.