Industrialists voice concern over gas discontinuation to captive power plants

KARACHI: The industrialists have expressed serious concern over the recent announcement of the federal government regarding discontinuation of gas to the industrial captive power plants and termed this decision as a “bomb blast”.

They expressed these views during a meeting of Sindh Industrial Liaison Committee held under the chair of Governor Sindh Imran Ismail on energy issues confronting to the industries, at Sindh Governor House.

Special Assistant to Prime Minister on Petroleum Nadeem Babar and Special Assistant to Prime Minister on Power Tabish Gohar were also present in the meeting.

The delegation of Sindh industries comprised of Muhammad Zubair Motiwala, Chairman BMG and former president KCCI, Muhammad Jawed Bilwani, Chief Coordinator Karachi Industrial Forum, Ismail Sattar, President Employers Federation of Pakistan, Asif Inam, former chairman Aptma, presidents of seven Industrial Town Associations, Abdul Hadi, President SITE, Muhammad Ali, President FBATI, Nisar Ahmed Khan, President SSHAI, Saleem Uz Zaman, President KATI, Faisal Moiz, President NKATI, Ajmal Afzal, President LATI, Mian Muhammad Ahmed, Patron-in-Chief BQATI and Zahid Saeed, Coordinator Sindh Industrial Liaison Committee.

The foreign buyers from across the globe have become doubtful and have approached the exporters in Pakistan enquiring about their deliveries in the wake of the government’s announcement which has been depicted as an energy crisis in the eyes of global buyers worldwide.

The relevant emails were presented and discussed wherein the foreign buyers have inquired that since the government has announced discontinuation of gas, how the Pakistani exporters will complete export orders? The buyers have also communicated that since there will be no gas and orders cannot be completed, therefore, they are thinking to divert the export orders given to Pakistani exporters to other countries. The delegation informed that the government’s announcement has created great uncertainty and unrest to buyers of US and EU.

The industrialists were of the opinion that if the government’s announcement was related to energy efficiency benchmark it should have been spelt rightly.

The government side responded that it was a misunderstanding and the government has never intended to close down any industrial unit whatsoever. Such action shall be taken only when industrial unit shall be provided alternate energy solution as per their requirement.

In case of any shortfall and variance in availability of electricity and the power consumption of the industry concerned, whether manufacturer or exporter, the gas would not be disconnected and shall be provided continuously till the time a policy framework is chalked out. Further there is an understanding with the K-Electric in case of Karachi and Wapda elsewhere in Pakistan that they both would come up and certify, particularly the K-Electric will certify to supply uninterrupted and quality power to the industries generating their own electricity through gas and KE will install all necessary infrastructure for expanding transmission and distribution to the doorsteps of the industries.

Moreover, unless the KE certifies that the company is ready to supply electricity to the respective industries, the gas of industries will not be disconnected. Tabish Gohar categorically informed that the process shall be executed gradually. In this connection the industrialists asked several questions which were thoroughly discussed and answered by Tabish Gohar and Nadeem Babar.

The industrialists discussed with regard to enhancement of gas prices from Rs 786 to Rs 930 which was confirmed. SAPM Nadeem Babar informed that RLNG shall be provided into industries during the month of February for which the industries are already paying enhanced tariff of Rs 930 per MMBTU.

He highlighted that the gas supply situation in the current year was better as compared to previous years. The industrialists disagreed that there were several industrial interruptions, low pressure and weekly gas closure for 24 hours many times after 21st December, 2020.

However, SAPM pledged that the government will honour its commitment to supply uninterrupted supply of gas to industries during month of February, specially to the export oriented / zero rated industries.

SAPM further assured that the government will also have fortnightly meetings with the industrialists to address their apprehensions and concern. He also instructed to MD SSGC to issue a press release clarifying that there shall be no abrupt industrial gas disconnections so that the perception of the international buyers with regards to gas disconnections shall be appropriately rectified highlighting that the gas will be continuously provided to the industries. Disconnections if any shall only be done only after providing alternate energy.

The government will never stop the export production at any cost. The industrial delegation demanded to restore the gas connections of 118 industries which were disconnected by SSGC whereby SAPM Nadeem Babar gave instant orders to MD SSGC to restore the gas connections forthwith.

SSGC was instructed to immediately restore the gas to industrial units having no other source of energy and for those industries having 500kW electricity connection but required load of 1000kW gas shall be supplied to generate 500KW electricity. Further, the industrialists discussed that KE would not be able to supply electricity in required quantum and quality to the industries as the company, in last summer, was short of 500MW for which they did load shedding.

The industries also expressed their concern that KE is also not a reliable supplier as the company is in practice to do abrupt disconnections there were problems in electricity supplies and fluctuations power outages. Tabish Gohar responded that the government shall take all the guarantees with regards to KE and industries shall not be disturbed at all.

The industrialists inquired about the energy efficiency benchmark whereby it was informed that any industry having more than 50% efficiency, it shall be the discretion of the industry whether to take electricity from KE or produce its own energy through gas?

The government side replied that they are committed to provide gas to efficient IPPs and CPPs. In the case of industries, efficient CPPs shall be provided gas and there shall be no gas disconnection if they are up to the mark.

To this end, the industries shall prove the 50% efficiency of their CPPs to qualify for the same. The industries also enquired that there were units which were producing their own energy and were also getting electricity from KE. For instance, an industry using 500kW from KE and 1MW from gas what would be the case. The government side replied that the said industry shall continue to produce 1MW on gas proving that it is energy efficient.

The industrialists also apprised about the demand of Rs 1.5 crore by KE from industrial consumers which was to be looked into at the level of the government to prepare necessary policy framework. The government representatives categorically stated that the government has never intended to close the gas of industries and there was a misunderstanding.

The announcement was not to close down the industries but to regularize the industry to ensure that the gas which is a precious natural resource should be spent efficiently.

The meeting also discussed and enquired about the gas supplied by private companies.

SAPM Nadeem Babar informed that any industry intending to get the gas supply from private producer can get the same and SSGC will provide the wheeling facility. In this connection, gas may be provided through bowzers and restrictions if any in this regard shall be removed.

Therefore, the industries shall have the option to buy gas from SSGC or through private companies. It was also confirmed that the committee will meet fortnightly to sort out the matters and streamline the affairs in the larger interest of the country.

Copyright Business Recorder, 2021