New life in Pakistan’s sugar industry as it generates clean energy

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For the last decade the sugar industry in Pakistan has been in trouble. Poor quality sugar cane, low productivity and surplus production have made it difficult for producers to make a profit. An EU-funded co-generation project has brought new life to an industry that employs as many as 80,000 in season. It will also generate 2,000-3,000 MW of clean electricity to the grid, greatly easing load-shedding in the country.

This was only a problem not only for Mr. Qureshi, but also for his employees – who number up to 1,000 in season, and 500 all year around.

An EU funded Switch Asia project is about to change all this. Omar M. Malik (Director of the HP Cogen-Pak for Sugar Sector of Pakistan project), introduced the concept of cogeneration, says Mr. Khalid Hayat, COO of the Faran Sugar Mills in Sindh province. They give us very useful information, a lot of help. We have now applied for tariff application. We’re very serious about it.

With the help of the HP Cogen project, Mr. Qureshi’s application to sell the electricity to the grid is now almost completed. Funding has been obtained, the tariff agreed. From March 2018 he expects he will be selling 32 MW to the grid. And because this will be a highly efficient clean energy generated from using the bagasse, a waste project, he expects to earn globally certified emission reduction credits. He has a consultant looking in that right now.

The whole investment will amount to ca. EUR 2.5 million, but they have estimated that this will be repaid in five years, making his company very much more profitable.

Mr. Hayat expects he will be able to sell 26.5 MW to the grid when finished. Our accountants have calculated an IRR of 24%!” he says. “This is not only really good for our profits, but it will also greatly relieve the load-shedding in the nearby villages. This has been such a useful project for us”, he says.

In Sugar mills, cogeneration refers to the generation of power and heat using bagasse (waste of sugarcane after extracting juice) as a fuel; it is a very efficient way to generate both heat and power. This can also be done using low-pressure boilers, but it is far less efficient due to loss of energy in the form of waste heat. High-pressure cogeneration system put the waste heat to good use, considerably increasing the amount of electricity that can be generated from the same amount of bagasse.
The goal of the European Commission funded Switch-Asia project is to promote economic prosperity and help reduce poverty in Asia by encouraging a sustainable growth with low environmental impact from industries and consumers, in line with international environmental agreements and processes.

“The sugar industry was in a dismal situation”, says Mr. Abdul Waheed Qureshi, Resident Director of Shahtaj Sugar Mills, Mandi Bahauddin, Punjab. “Our cane quality is not great. The yield is low. The recovery rate is low. Pakistan also has a surplus production, which drives the price down. Profitability has been very problematic in the last decade. We can’t export without government subsidies.”
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