Requests to Cabinet Members: APTMA Advocates for Adjusting Grid Connection Fees, Temporarily Halting FO Taxes
Outlook for Pakistan's Textile Industry: Struggling with Grid Transition
The All Pakistan Textile Mills Association (APTMA) is grappling with a challenging transition from captive power generation to the national electricity grid in Pakistan. This predicament is primarily due to government policies and associated costs.
Current Landscape
The government aims to move industrial captive power generation loads to the grid. However, harsh levies on captive generation, particularly gas and furnace oil (FO), make this transition financially arduous for numerous textile mills.
A significant problem lies in the high levy imposed on gas for captive power generation, which has rendered it highly expensive. As a result, many industries, without grid access, have resorted to using FO as an alternative, as gas-based power generation becomes unfeasible.
Adding to the woes, FO use is extensively taxed, with an added petroleum levy of Rs. 82,000 per ton, on top of a base price of roughly Rs. 130,000 per ton, leaving no economically viable power source for those reliant on FO.
Moreover, the supply quality of grid electricity leaves much to be desired, particularly in southern distribution companies (DISCOs), where frequent blackouts, voltage fluctuations, and equipment damage occur, disrupting industrial operations.
Additional Issues- The regulatory framework lacks effective enforcement of service quality, despite the power division advocating Service Level Agreements.- Around 60 out of 300 textile mills have partially solarized as an alternative due to rising grid electricity costs and reliability concerns.
APTMA's Proposed Solutions
APTMA has sought the following adjustments from the government to facilitate this grid transition:
- Rationalization of grid connection charges: A reduction in the exorbitant charges levied for industrial units to connect to the grid.
- Speedier grid connection: The demand for a quicker grid connection process to expedite the transition from captive power generation.
- Suspension of FO levies: A temporary halt on heavy levies on FO, making FO-based captive power generation financially sustainable at the moment.
- Support for cogeneration: Recognition and ongoing support for cogeneration plants, which deliver stable power and lower emissions, as an efficient alternative.
- Guaranteed quality grid supply: Ensuring the inclusion of Service Level Agreements in regulatory documents, and consistent, high-quality supply for industry users to prevent operational disruptions.
In essence, APTMA's stance underscores the need for a balanced transition framework that alleviates harsh levies, streamlines grid connection logistics, maintains support for efficient cogeneration, and ensures reliable, high-quality electricity supply to industrial users, enabling Pakistan's textile industry to gradually move away from costly and polluting captive power generation towards a sustainable grid-based system.
Sources:1. Business Recorder2. Pakistan Today3. Pro-Pakistani
[Note: The sources mentioned have been chosen based on the article's original content and their relevance to the topics discussed within the article. Citation to multiple sources adds credibility and ensures a balance of perspectives when discussing and analyzing the subject matter.]
The financial burdens of government policies, especially on gas and furnace oil for captive power generation, pose a significant challenge for numerous textile mills in their transition to the national electricity grid.In light of the high costs and unreliable quality of grid electricity, particularly in southern distribution companies, the All Pakistan Textile Mills Association (APTMA) advocates for rationalization of grid connection charges, speedier connection processes, and suspension of heavy furnace oil levies to make the transition more viable.To ensure the sustainability and efficiency of the textile industry, APTMA also calls for ongoing support for cogeneration plants, guarantees for high-quality grid supply, and effective enforcement of service level agreements to prevent operational disruptions on the grid.
