CAPTIVE POWER PLANTS

Electricity plays a vital role in economic growth through investment in all segments of the economy

By AMANULLAH BASHAR
Apr 05 - 11, 2004

The large scale manufacturing sector is producing at least 400Megawatt (MW) and requests for additional 350MW of electricity for setting up captive power for self power generation is pending with the government.

The growing trend of self power generation in the large scale manufacturing sector, according to a leading industrialist, is to ensure uninterrupted power supply at a cheaper price, as compared to the supply and cost by the utility companies in Pakistan.

In fact the self power generation was allowed by the government especially for the export-oriented industries which are exporting at least 70 percent of their products. Most of the industries which are producing power on their own resources belong to textile sector. The power is being produced through gas-fired power plants. Under a policy, the Sui Southern Gas Company (SSGC) is providing gas for power generation to those industries which produce an export certificate from Export Promotion Bureau and relevant associations of the trade recommending for gas connections.

The sharp increase for power generation is also indicative from the fact that SSGC has provided gas connections to 172 industries last year and is likely to provide gas to equal number of industries during the current financial year.

Although the captive power plants have a positive aspect of providing relief to the KESC, which faces an acute shortfall in power generation because of ever growing demand for electricity.

At present KESC has an installed capacity of about 1750MW but produces not more than 1250MW against the demand of around 1850MW. The shortfall is met from various sources including WAPDA, Tapal, Gul Ahmed, Pak Steel, KANUPP.

According to an estimate, KESC paid over Rs15.5 billion for purchase of power from these sources. The unfortunate situation for KESC is that at one hands it pays heavily for purchase of power, but on the other hand some 38 percent of the electricity is stolen by illegal consumers through Kunda system. Currently, KESC is taking effective measures against power theft by installing bulk meters at the point of PMT which indicates how much power was supplied and how much of units were billed in a particular area. Another effective measures taken at a massive scale is the removal of the meters to outside of the premises of the consumers. This step has also helped in controlling the power theft and it is expected that when the entire consumers number of 1.8 million were provided new meters the size of power theft may further reduce drastically.

The government had inducted Army into the utility company aiming at controlling the increasing transmission and distribution losses both in KESC and WAPDA systems some three years ago. However, the administrative steps taken by the management produced a little difference as the trend of power continues despite all warnings and steps.

Looking deeply into the problem, one may find that one of the major reasons for power theft in our culture is because of the unaffordable electricity rates especially by the middle and low income groups. On the contrary, the posh areas of the city as well as moneyed people running comparatively smaller industrial units are on top of the list of power theft.

In order to overcome the problem of short supply as well as reducing the cost of electricity, more emphasis is being given on hydel power, coal-fired power generation and also on gas-fired systems as against the costly furnace oil which was the main factor for pushing up the cost of power generation in Pakistan. Some of the projects under this policy are coming up and the shifting of the major portion of the electricity from fuel to other cheaper fuels may start producing results in next two or three years. Currently, everybody both in the private as well as in the public sector is talking about poverty alleviation which has increased during last couple of years. Reduction in poverty is on top of the present government's agenda. Since electricity plays a key role from grassroot level to the high profile segment of the society, an affordable price will certainly encourage economic activity and ultimately help reducing poverty from this part of the world.

Realizing the problem of high electricity prices, the government instituted a task force for recommendation for reducing the power rates in the country. Although power rates were reduced in paisas in the past but experts were of the opinion that to make a visible impact on the electricity, it is the government that should come forward and reduce number of its levies on power consumption.

Essentially, electricity plays a vital role in economic growth through investment in all segments of the economy especially in the industrial sector. More economic activity means more revenue, but unfortunately instead of buying this idea the economic managers is using utilities as tax collecting agencies, probably under the IMF conditions. People are attaching hope that since the government has decided to say good buy to the IMF from next financial year, it may take decisions for reducing taxes on power consumption in Pakistan.