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Inefficient captive power plants causing loss of Rs70bn

Inefficient captive power plants installed at industrial units getting natural gas at comparatively reduced tariff are causing a loss of Rs70 billion per annum to the national exchequer.

Ghiyas Abdullah Paracha, chairman of the Supreme Council All Pakistan CNG Association (APCNGA), said that the policy to provide cheap gas to the captive power plants was framed to gain political favours, which was causing a colossal loss to the economy.

“The technology, efficiency, cost, consumption, production and other parameters related to the captive power plants are questionable, as industry has been using scrap plants in place of modern and better equipment,” he said at a meeting of the APCNGA Central Executive Committee. Later talking to The News, Paracha said that the average efficiency of 113 captive power plants, mostly installed in textile units, stood at 28 percent and a lot of gas was being wasted in the process of generating electricity, causing a loss of Rs190 million per day.

Quoting the data of Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL), Paracha said that the captive power plants were getting 454mmcfd gas per day, of which 327mmcfd was lost to inefficiency.

The Planning Commission and the Ministry of Water and Power have also termed primitive captive power plants a major drain of indigenous hydrocarbon resources.Paracha said that the government is favouring owners of captive power plants on the cost of domestic consumers, compressed natural gas, fertiliser and general industry.

Several industries closed since long were being provided gas, while the power generated through that gas was being sold to running industrial units without approval from the regulator, National Electric Power Regulatory Authority (Nepra), which must be probed, he said.

The country would not have faced energy shortages of such magnitude if decisions were taken on merit and the gas allocated to the captive power plants was provided to efficient power houses, Paracha said.

“Power generation companies are facing heavy losses as gas consumption, as well as around 2,000MW load has been shifted to the unregulated gas gulping the captive power plant sector, which do not require a licence and have no performance and efficiency checks,” he said.

“The operation and maintenance cost of the distribution companies is getting high; average tariff is going up, while average sale declines, causing losses to the government but the captive power plants thrive on economical gas and the petroleum ministry support.”

Criticising the move to lower the efficiency benchmark for the captive power plants, Paracha demanded a probe in the issue to fix responsibility on those who played havoc with the country for their personal welfare.

He demanded an immediate comprehensive and independent audit of the captive power plants, ban on distribution companies buying power from the captive power plant, using cheap gas as fuel and concrete steps to improve the efficiency and avoid wastage of precious natural resources in the national interest.

“The government needs to increase gas tariff for the captive power plants by a minimum of 150 percent to resolve all issues, ensure efficiency and reduce power outages. Besides, there is a need for a well-integrated power policy, addressing various issues to ensure an overall development of the sector and economy,” he added.

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