PSMA demands 11 cents for captive power

 ISLAMABAD: The Pakistan Sugar Mills Association (PSMA) has rejected the 9.28 cents per kWh offer by National Electric Power Regulatory Authority (Nepra) to produce electricity for the national grid.
The PSMA members in a meeting held here on Wednesday observed that the minimum tariff for the captive power produced by the sugar mills should be 11 cents per kWh.

Nepra had notified last week the new prices for the bagasse and coal, co-produced electricity by the sugar mills. However, the prices were conditional to the timeline that the electricity produced by the sugar mill should be online by 2014.

PSMA Chairman Iskander Khan talking to Dawn said that Nepra was willing to give around 14 cents per kWh to the Independent Power Producers (IPPs), while the Rental Power Plants (RPPs) had been offered 17-20 cents per kWh.

He also criticised respective governments for not taking any serious measures for tapping power generation potential of sugar mills.

The meeting was informed that the association had written a letter to the government in January 2007 seeking government attention for power generation.

“If the government would have taken the subject seriously in 2007, the country would be having additional 2,000 MW at cheaper rates from the sugar mills,” said Iskander Khan, adding that this power production capacity would have been 3,000 MW by end of 2011.

The sugar mills and Nepra had been at loggerheads over the tariff for captive power.

Nepra had earlier determined 8.286 cents per kWh for the sugar mills that would generate power under co-generation policy, while the sugar industry had been demanding 11.11 cents per kWh.

While Nepra said the 9.28 cents per kWh offer had been made to encourage cheaper electricity through renewable resources and to utilise the available generation capacity of sugar mills, the PSMA maintains that the electricity regulator was ignoring the basic advantages of producing electricity through bagasse and coal.

“In its own studies Nepra has acknowledged that up to $980 million can be saved in generating 3,000 MW from bagasse and coal instead of imported furnace oil for 188 days,” Mr Khan said.

He added that more foreign exchange would be saved as the sugar mills can produce electricity throughout the year from bagasse and coal.

“We need to invest in new pressure boilers that would utilise only 25 per cent of the bagasse for power generation compared to the existing ones,” he said, adding out of 80 operational sugar mills in the country, around 40 mills can convert to new boilers as they have a minimum crushing capacity of 6,000 tons per day, if the tariff is raised


Source Dawn News