High Pressure Cogeneration for Sugar Sector in Pakistan

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Context

Pakistan’s sugar sector is the second largest agro-based industry in Pakistan with one of the highest annual contributions to the country’s GDP. While processed cane sugar is the main produce of the industry, bagasse, the fibrous husk left after processing, is a useful by-product that is burnt to produce steam for electricity generation. However, though Pakistan’s sugar sector has an annual availability of 4.4 million metric tons of bagasse, 46% of this produce is wasted in inefficient, low-pressure cogeneration systems. Although an alternative is to use high-pressure cogeneration (HPC) systems that consume less and produce more energy, such systems have a high installation cost and require technical expertise that is not readily available in Pakistan.

Objectives

The High-Pressure Cogeneration (HP Cogen) Pakistan, project under the EU funded Switch Asia Programme aims to promote the usage of HP Cogen systems by

  • Facilitating the export of electrical power generated in sugar mills to the national grid or to allied industrial units.
  • Garnering the support of government authorities.
  • Introducing supportive policies and facilitating the implementation of HP Cogen technology in the sugar mills can achieve the switch to HP Cogen across Pakistan.
  • Producing sugar through more energy efficient ways that will reduce Pakistan’s electricity shortage.

Expected Results (Technology-Based):

  • Establishing a regulatory National Bagasse Power Support Cell at the Pakistan Sugar Mills Association (PMSA) to offer technical, financial support to sugar mills staff
  • Consulting with technicians and sugar mills staff to implement strategies are to be developed and standardized technical practices in high pressure equipment design are to be recorded and followed for efficient energy production
  • Training of staff and technicians to be held regularly at each of the sugar mills to ensure that regulatory standards are upheld
  • Recording the developments caused by the switch to HP Cogen in 70 of Pakistan’s sugar mills in the form of business case studies
  • Creating a marketing network between sugar mills and Indian/local technology providers to ensure constant up gradation of technology used

Expected Results (Finance-Based):

  • Providing financial risk assessments of bagasse power based projects
  • Developing of toolkits to facilitate usage of the State Bank of Pakistan’s (SBP) Credit Guarantees and schemes for Financing Power Plants Using Renewable Power
  • Providing information to the five major Financial Investors in Pakistan on the prospects of bagasse based power cogeneration
  • Providing of trainings to sugar mill financial staff on the utilization of SBP toolkits and the Clean Development Mechanism (CDM) which allows emission-reduction projects in developing countries to earn certified emission reduction credits globally
  • Ensuring of complete funding for at least 10 HP Cogen projects
  • Designing project documents to bid for CDM financing for at least 10 projects

Expected Results (Regulatory)

  • Establishing a multi-stakeholder platform for bagasse power based systems that holds involvement from both the interested public and private parties
  • Urging for policy level change and support for clean energy and more efficient energy systems with Sugar Sector stakeholders, Private Power and Infrastructure Board and the Power Distribution Companies (DISCO’s)
  • Conducting consultations and meetings to facilitate the adoption of special tariff schemes for HP Cogen

Further Considerations


Ultimately, the goal of the European Commission funded Switch-Asia project is to promote economic prosperity and help reduce poverty throughout Asia by encouraging a sustainable growth with low environmental impact from industries and consumers, in line with international environmental agreements and processes.

Testimonial


Shahtaj Sugar Mills is an example of a factory that has benefited immensely from the HP Cogen initiatives. According to Mr. Abdul Qureshi, Resident Director, the yield and recovery rates of cane sugar were incredibly low leading to heavy losses. This was only a problem not only for Mr Qureshi, but also for his employees – who number up to 1000 in season, and 500 all year around.
With the help of the HP Cogen project, Mr. Qureshi’s application to sell the electricity to the grid is now completed. Funding has been obtained and the tariff agreed. The whole investment will amount to a EUR 2.5 million, but consultants have estimated that this will be repaid in five years, making Shahtaj Mills very much more profitable. From March 2018, Mr. Qureshi expects he will be selling 32 MW to the grid. Since this will be highly efficient clean energy generated from using bagasse, he expects to earn globally certified emission reduction credits. Moreover, generating their own energy also reduces load-shedding in surrounding areas, ultimately benefiting entire villages.

Total Budget
EUR 2,161,785.20
(EU Contribution: 79.80%)
(Source: http://www.switch-asia.eu/projects/hp-cogen-pak/)

Additional Information

Government Partners 
• National Electric Power Regulatory Authority (NEPRA)
• Alternate Energy Development Board (AEDB)

Implementing Partner
• Iqbal Hamid Trust (IHT), Pakistan Pakistan Sugar Mills Association (PSMA), Pakistan
• Sequa, Germany
• The Energy Resource Institute, India

Local Technology Providers
• Descon Engineering Limited, Lahore
• Gresham's Eastern (Pvt) Ltd, Karachi
• The Industrial Enterprises, Lahore Heavy Mechanical Complex (Private) Limited, Taxila
• Karachi Shipyard & Engineering Works, Karachi
• FABCON Design and Engineering (Pvt) Ltd., Lahore

Beneficiaries  
Local Businesses

Location
The 70 sugar mills all across the Pakistan mainly located in Punjab, Sind & KPK Duration 


“Running a high-pressure boiler is very difficult, so this project is really useful.. Once our application is approved we will have 24 months to complete it and then we will be able to sell 26.5 MW to the grid. Our accountants have calculated an IRR of 24%! This is great for our profits – it is very difficult to make a profit now just from sugar. But it will also greatly relieve the load shedding in the villages surrounding Sheikh Bhir Ko, near Hyderabad, in Sindh. ” Mr. Khalid Hayat (Chief Operating Officer), Faran Sugar Mills, Hyderabad, Sindh
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