In trying to fix the power sector, the IMF has created a mess in the gas sectors, While signing the $8 billion Extended Fund Facility, one of the many conditions the government agreed to was ending the supply of gas to the Captive Power Plants of the textile industry, because the gas-fired plants that had been put up were not efficient. These plants had been put up because loadshedding was causing the industries problems, most notably a failure to meet export deadlines. The IMF wanted the plants to switch over to the grid, where their payments would go towards paying the Independent Power Producers the capacity charges they would levy whether or not they generated the power.
The problem is getting the industries back into the national grid. The agreed cutoff date was 31 January 2025. The Power Division believes that two years are needed for the switch. If it is rushed, it predicts heavy losses for the government, particularly because it has ordered 48 extra cargoes of liquefied natural gas from Qatar. There is now a problem of disposing of this gas surplus if the cutoff date is fulfilled. The government’s winter package, meant to increase consumption in low-consumption winter months, is not necessarily a negative, but is certainly a complicating factor. The idea is for the gas to go to more efficient gas-fired IPPs, which would be receiving capacity charges anyhow. One problem is that this might drive industries to explore other alternatives, such as solarization, with the sort of battery storage that would allow operation even on rainy or cloudy days. If that happens, the government, the IPPs and the IMF are well and truly sunk, because though that solution involves a certain initial investment, it provides free power, and amortized over the life of the project will result in substantial savings.
The government is once again confronted with the choice between backing old and new technology. Does it encourage or discourage industry from making the switch to solar power, or does it ensure that they are forced onto the grid, and pay for unreliable and exorbitant power? If industry is to be encouraged to play its due role in the national economy as a source of wealth, jobs, taxes and exports, the government must enable it to be technologically at par with, if not ahead of, the rest of the world. Or else it can get in good with the oil lobby.
