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Letters sent to ministers: APTMA for revising grid connection charges, suspending FO levies
ISLAMABAD: All Pakistan Textile Mills Association (Aptma) has sought rationalization of grid connection charges, reduction in grid connection time and suspension of petroleum and carbon levies on Furnace Oil (FO).
In letters to Power Minister Sardar Awais Leghari, Petroleum Minister Ali Pervaiz Malik and Director General Textile (Commerce Ministry), Chairman APTMA, Kamran Arshad stated that the government has adopted policies to transition industrial captive generation loads to grid electricity.
However, the punitive levies imposed have rendered industrial operations financially unviable without offering a viable transition pathway to grid-based power.
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Aptma maintains that the imposition of a Rs. 791/Mmbtu levy on gas used for captive power generation has made it entirely cost-prohibitive. While intended to encourage migration to the electricity grid, the reality on ground is that many industrial units still lack grid connections and, in response, have been compelled to switch to furnace oil (FO)-based captive generation.
The Association stated that the imposition of a petroleum levy of Rs. 82,000/ton on FO-on top of the base price of approximately Rs. 130,000/ton—has now left these industries with no economically viable power source.
Aptma has cited the example of Soorty Enterprises, a major textile and apparel manufacturer with $400 million in annual exports, employing 35,000 people across different divisions. Soorty has two mills, one in Landhi under KE and another on the Super Highway under HESCO, with a total power requirement of 35MW.
Following the grid transition levy on gas, both shifted from gas to FO-fired captive generation that costs around Rs. 33/kWh, compared to around Rs. 29-30/kWh on the grid and will shoot up to Rs. 51/kWh following the levies on FO.
The company prefers to run its operations on the electricity grid under KE and HESCO, as it is cheaper than FO-fired captive generation even before the levy. However, KE and HESCO have quoted a cost of Rs 8 billion each to provide grid connections to these units, totalling Rs 16 billion to be paid up front. Additionally, they have been told that it would take about 3 years to connect them to the grid, with no guarantee of timely completion or energisation.
On top of this, the company would be responsible for getting approvals from several government departments (like FWO, railways, local authorities, etc.), which adds further costs and difficulties. This situation is wholly untenable.
The company cannot rely on gas or FO-fired generation for 3 years with the punitive levies as it will go out of business. However, paying Rs. 16 billion upfront for a grid connection with no guarantee of timely access will also push the company towards bankruptcy. It is at a dead end, with no viable options.
'While we have highlighted the example of only one company, and that too one of the biggest exporters of Pakistan, the same issues are being faced by several of our members, particularly in urban hubs like Lahore and Karachi where issues related to right of way and land availability are prevalent,' Aptma Chief said adding that no company can afford to pay billions of rupees for a grid connection, especially without any guarantee of timely completion.
On the one hand, the industry is being penalized for using alternate fuels such as gas and FO and on the other hand, it is effectively barred from accessing the grid due to prohibitively high connection charges, excessive lead times, and bureaucratic delays. It is neither reasonable nor practical for the Government to mandate grid transition while the distribution companies impose insurmountable barriers to achieving it.
Considering the foregoing, Aptma recommended the following: (i) Grid connection charges for export-oriented industrial units be rationalized and brought within a financially viable range;(ii) Grid connections be completed and fully energized within a maximum period of six months from fulfillment of demand notes; and (iii) all levies on industrial captive generation -including petroleum and carbon levies on FO-be suspended until all industrial units relying on gas/FO as primary sources of energy are provided affordable and operational grid connections.
Copyright Business Recorder, 2025
