ISLAMABAD: Federal Minister for Petroleum Musadik Malik said the government is having negotiations with the International Monetary Fund (IMF) and other multilateral institutions to avoid shutting down the captive power facilities.
Responding to a calling attention notice in the National Assembly on Friday regarding curtailing domestic production of gas and yet purchasing LNG at much higher prices, and simultaneously depriving domestic industry of gas for captive power plants, the minister said that the caretaker government had agreed with the International Monetary Fund (IMF) to close down captive power facilities.
However, the current Pakistan Muslim League-Nawaz (PML-N) government is negotiating with the IMF and other multilateral institutions, and has argued that shutting down captive power is not in the country’s economic interest. He said that negotiations on this matter are still ongoing.
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It is pertaining to mention here that according to the conditionality of the IMF, the federal government is bound to disconnect gas supply to captive power plants (CPPs) and transition the industrial sector to grid electricity by January 2025.
The minister said, “We will fight the case and will try our level best to not shut down captive power facilities. At that time, we advocated for rationalising captive power, and these rates have now been adjusted. The price of captive power has been increased, creating a level playing field for others. There is no justification for shutting down captive power plants since the rates are now equitable.”
He said that only 18 out of 2,500 industrial units in Karachi operate captive power, generating electricity at Rs13 per unit. In contrast, other units purchase electricity from K-Electric at Rs60 per unit, putting them at a significant competitive disadvantage.
The minister said that the country currently has a surplus of LNG, and a tender for one additional LNG cargo has been floated to meet the gas requirements for January. He said that the government is procuring LNG under term contracts.
Copyright Business Recorder, 2024
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