KARACHI: The government’s efforts to utilise bagasse as renewable energy source have been yielding positive results, as the Mehran Sugar Mills Limited (MSML) has decided to further invest up to Rs 750 million in the 26.5MW bagasse-based power project.
In this regard, the company has decided in its board of directors meeting to set up another bagasse-based power project with an installed capacity of 26.5MW while the project shall be 100 percent owned by MSML.
Bagasse is dry pulpy residue left after the extraction of juice from sugarcane and it is used as a renewable power generation source.
In a notice to Pakistan Stock Exchange (PSX) on Monday, MSML said, “In view of the rising demand for electricity in the country and government’s favorable policy for promoting bagasse-based power projects, MSML has decided to set up a 26.5MW bagasse-based power project and the company has in principle decided to invest equity up to Rs. 750 million in the power project. The plant shall be operational latest by December 2018.”
Further, as a part of its diversification plan, MSML has also decided to invest Rs 125 million in a company (to be incorporated). The proposed company would be involved in the manufacturing and branding of confectionery/baking products. MSML plans to acquire 24% equity of the new company. Formal approval from shareholders will be sought in due course of time for both investments.
It is to be noted that MSML at Tando Allahyar has already entered into an arrangement with the Hyderabad Electric Supply Company (HESCO) to supply around 14.06MW of power at Rs 10.10 per unit. “The power export to HESCO during the crushing season remained satisfactory and we supplied 5,158,832 units to the national grid. As much as 95% of power receivables have been realised. We appreciate the coordination of the regulatory authorities as well as our distribution company HESCO to ensure a smooth process and then continual support in buying renewable and indigenous power from the sugar industry,” said the company’s director.
MSML is working to set up generation company namely UniEnergy Limited and in this regard work has been progressing with land registered in the name of the company and a wind mast installed at the location. All financial and technical feasibilities have also been prepared, however the company might not be able to meet the present tariff, which expires in June 2016 due to non-availability of the grid presently, according to the company’s report. “We have presently made an equity investment of Rs 20 million, representing 20% equity in the new company,” it added.
About 16 sugar mills are supplying nearly 120MW power to discos. With high-pressure boilers, each sugar mill is assumed to produce 15MW from bagasse, leading to potential aggregate capacity of all sugar mills at 1,200MW. Presently, the country’s 80 sugar mills have a total installed cane crushing capacity of 75 million tonnes per season, of which around 80 percent is being utilised.
The National Electric Power Regulatory Authority (Nepra) has been awarded licences to 24 sugar mills to generate power from bagasse and supply it to the national grid. The authority also approved an upfront tariff of Rs10.50 per unit.