Plans afoot to generate 3,000MW in next five years

KARACHI: The government is planning to tap sugar industry resources and to generate around 3,000 megawatts during the next five years to meet power shortage in the country. This will help in reducing the import bill of furnace oil by $980 million.

ìGeneration of cheaper electricity through renewable resources and use of bagasse in the sugar industry will be encouraged,î an official in the National Electric Power Regulatory Authority (Nepra) said, adding that Nepra has taken a landmark decision to provide incentives to those sugar mills who have shown their readiness to generate electricity for the national grid by the end of March 2014.

Announcing its tariff determination for the first sugar mill, which has proposed to generate 80MW through use of bagasse and coal, the regulatory authority has decided that in order to encourage available potential of over 3,000MW through use of bagasse and coal, the internal rate of return (IRR) of 18 per cent on bagasse will be given as an incentive to those sugar mills who achieve commercial operation by March 2014.

The IRR for bagasse at 18 per cent is three per cent higher than the IRR allowed to the thermal projects on residual fuel oil or gas.

The official said that the bagasse based Co-Gen power projects of 3,000MW have the potential to earn over $980 million of foreign exchange per annum that can be spent on the purchase of expensive residual fuel oil for generation during 188 days bagasse-based operations.

It is expected that the tariff of 9.28 US cents per kilowatt per hour will be offered to the sugar industry based on the incentive of higher IRR, which will go a long way in meeting the longstanding demand of the industry.

The country is facing worst kind of power crisis for the last several years and no major addition was made in the generation capacity.

The shortfall, which is being estimated at around 4,500MW, is hurting the national economy and hampering the overall economic activities across the country.

During 9MFY10, power projects of 231MW have started operations and a few more projects of around 1,693MW are likely to start operations in 4QFY10. These projects include rental power projects of 496MW against an earlier expectation of 991MW.

According to the Private Power Infrastructure Board (PPIB), projects of around 1,759MW and 1,425MW are expected to start operations in FY11 and FY12, respectively.

An energy expert believes that the power shortfall will persist till FY13, as the demand will continue to rise in coming years.

source: thenews