'Gas cuts to CPPs will be disastrous'

Large and medium-sized industrialists have urgently called on the government to reconsider a recent decision to suspend gas supply to captive power plants (CPPs). They warn that this move could shut down over 1,300 factories, displace over three million workers, and lead to a severe economic crisis following a sharp decline in exports.

Chairman of the Pakistan Textile Council, Fawad Anwer, raised concerns, noting, "Gas supply to the CPPs is planned to stop on January 1, 2025. Industrialists, who have invested heavily in these power plants, are facing numerous challenges." He explained, "For instance, K-Electric (KE) lacks both the capacity and infrastructure to provide reliable alternatives. If a large exporter wants to switch from gas to KE's grid, they are often asked to wait up to two years and to invest millions to get the necessary KE infrastructure. Our CPP system operates at 70%-75% efficiency, while government power plants struggle to reach 30%-40%. Cutting off gas to CPPs without logic or planning will have serious repercussions."

He argued that CPPs cannot be shut down overnight without discussions to ensure industries have reliable electricity. "We're also subsidising gas for domestic and fertiliser sectors. If around 1,300 CPPs are shut down, who will bear these subsidies? How will the shortfall be managed? And with existing LNG contracts, if local industries don't buy this gas, what will happen to it?"

Anwer added that the industry has no backup in place, and such large-scale transitions typically require five to ten years of planning. He urged government officials to engage in serious discussions with industrialists on viable backup plans. "This sudden announcement of suspending gas supply could halt industries, cripple exports, and lead to widespread unemployment, with single factories employing upwards of 10,000 workers," he said, adding, "Why should the industry suffer because of past policy mistakes?"

The Landhi Association of Trade & Industry (LATI) echoed these concerns, urging the government to reassess its captive power policy. LATI spokesperson and former president Siraj Sadiq Monnoo described the decision as a "poorly planned policy shift."

"The abrupt and uncalculated approach behind this decision would cause a steep decline in both large-scale and medium-scale industrial output," Monnoo warned. He noted that many CPPs either lack a direct grid connection or only have partial access. "Forcing gas-dependent industries to transition to grid power would cost billions per company and require a long timeline," he said, predicting that over 1,300 manufacturers and exporters would be forced to close if gas supplies were cut off. He further highlighted that households and fertiliser plants receive subsidised gas at the expense of industrial consumers.

President of the Karachi Chamber of Commerce & Industry (KCCI), Muhammad Jawed Bilwani, expressed grave concerns about the government's decision to suspend gas supply to CPPs. Bilwani warned that this decision, reportedly made under the International Monetary Fund (IMF)'s influence, would lead to widespread closures among medium and large-scale industries. He stressed that the substantial investments made in these CPPs would go to waste, a cost that no industry can bear.

"I urge the government to immediately withdraw this illogical decision, bring stakeholders to the table to explore better solutions, and urgently approach the IMF for discussions on the issue. Otherwise, this anti-industry move would inflict irreversible damage on the economy," Bilwani cautioned.

He added that shutting down CPPs could seriously harm the economy, as it would result in the closure of around 1,400 industries, with CPPs currently producing 600 to 800 megawatts of power. Bilwani went on to criticise those who proposed the suspension to the IMF and urged for exemplary punishment for policymakers responsible, describing their actions as "anti-national."

Bilwani also reminded the government that it had previously encouraged the business community to establish CPPs by guaranteeing uninterrupted gas supplies to support these plants during Pakistan's severe electricity crisis in the early 2000s. "Not a single industrialist can endure the impact of CPP closures due to a gas suspension. Industries simply cannot depend on KE's inconsistent and unreliable electricity supply, which frequently disrupts sensitive machinery and halts production due to even brief fluctuations," he stated.