Industry could achieve $12 billion export target if energy crises resolved

The textile industry has the capacity to enhance power generation to 1200 MW if government ensures 340-mmcfd gas supply to the Captive Power Plants (CPPs). Informed sources told Business Recorder on Wednesday that growing energy shortage especially in the manufacturing sector is impeding industrial growth and could lead to substantial reduction in production, jobs and exports over the next several months.
However, the industry could realise $12 billion export target if energy crises are resolved. Sources said that when energy crisis started, the government asked industry to install CPPs using furnace oil to meet their requirements. However with the passage of time the cost of furnace oil increased and government asked the industrialists to shift CPPs to gas. Industrialists made huge investment and transferred their power production units to gas. But now gas is not available and the industrialists are vying for provision of gas on priority basis as 70 percent of the textile industry has installed CPPs to meet their requirements.
Sources revealed that to lessen the gravity of power shortage, the government had decided to procure additional power from CPPs installed by the textile sector to reduce the energy shortfall in the country. CPPs running on furnace oil are already providing 200 MW power to Distribution Companies (Discos) and have the capacity to generate an additional 250 to 300 MW, if the authorities concerned resolve the lingering issue of connectivity with its power distribution system, said one textile mill owner. The industry wants the government to immediately come up with a national energy policy to address the issues of gas and electricity cuts for manufacturers and exporters.
Presently CPPs are providing captive power to Faisalabad Electricity Supply Corporation (FESCO), Lahore Electric Supply Company (LESCO) and Karachi Electric Supply Company Limited (KESCL). The export-oriented textile industry of the country remained without gas supplies for 100 days during the last one-year from November 1, 2009 to October 31, 2010. Moreover, it had to face long duration of electricity cuts like the rest of the manufacturing sector. Many textile manufacturers claim that the industry had suffered production losses to the tune of $1.5 billion during the last one year because of gas and power cuts.
The cost of captive power plants in textile mills varies from unit to unit and from area to area. But the average power generation cost of a captive power plant is cheaper than other sources of power generation. Power generated from CPPs cost Rs 5.50 per unit against Rs 12 generated through furnace oil and Rs 18 diesel, sources added.