Karachi, October 2, 2024 – The President of the Karachi Chamber of Commerce and Industry (KCCI), Muhammad Jawed Bilwani, voiced strong concerns on Wednesday over the government’s decision to suspend gas supply to Captive Power Plants (CPPs) by 2025.
KCCI President Bilwani warned that the move, part of an agreement with the International Monetary Fund (IMF), could lead to widespread closures of medium- and large-scale industries across Pakistan, resulting in irreparable economic damage.
Bilwani emphasized that the government had previously encouraged industries to invest in CPPs to combat electricity shortages, promising a stable supply of gas. As a result, significant investments were made in CPPs, which are 64% more efficient than Independent Power Producers (IPPs). The suspension of gas, he argued, would render these investments worthless and devastate industries that cannot depend on the inconsistent electricity supply provided by power distribution companies.
“Shutting down captive power plants is undoubtedly a wrong move,” said KCCI President. He urged the government to reconsider and negotiate with the IMF to remove this condition. He warned that if the decision is not reversed, it will cause massive closures, severely damaging the economy.
Bilwani pointed out that the inconsistent and unreliable supply from distribution companies like K-Electric (KE) would further exacerbate the situation. He noted that frequent load-shedding and voltage fluctuations disrupt industrial operations, particularly affecting sensitive machinery, leading to hours of halted production.
Additionally, many industries with CPPs are located in remote areas where KE grid stations do not exist, making reliance on the national grid impractical. Bilwani argued that CPPs currently generate between 600 to 800 megawatts of electricity, a capacity KE may not be able to match.
The KCCI president also highlighted that the gas currently supplied to CPPs is done at a higher rate than the rate supplied to domestic sectors. Diverting this gas would force the government to provide further subsidies and deal with increased line losses. Bilwani expressed concerns that shutting down CPPs would leave the federal government with surplus contracted liquefied natural gas (RLNG) and no buyer for it, increasing the burden on the economy.
He further pointed out that Pakistan’s industrial sector is already struggling, with a recent NEPRA report showing a 25% decline in industrial electricity consumption. He warned that forcing industries to shut down their CPPs would push the country’s industrial performance to an all-time low.
KCCI president urged the government to withdraw the decision immediately, engage stakeholders in finding a viable solution, and negotiate with the IMF to avoid what he called an “anti-industry” policy that would cause unhealable damage to the national economy.
