Import duties: concessions for textile proposed

Ministry of Textile Industry has proposed that concessions be given to the textile industry in import duties on energy related equipment, official sources told Business Recorder.

The sources said that ECC of the Cabinet on October 23, 2012 had directed the Ministry of Petroleum and Natural Resources to resubmit revised policy guidelines for energy efficiency of Captive Power Plants (CPPs) and natural gas boilers.

In pursuance of the direction of the ECC of the Cabinet, Petroleum Ministry sought the comments of Ministry of Industries, Ministry of Water and Power and Ministry of Textile Industry.

Comments of Ministry of Textile Industry have been received so far who, while agreeing with the proposed guidelines for energy efficiency audit for the CPPs and boilers, has made following suggestions: (i) The textile industry requires a long term energy plan and it should be informed in future which technology needs to be installed, importantly, such information may be shared with Ministry of Textile Industry on urgent basis; (ii) spinning industry should be encouraged for investment in downstream industry so that they can also utilize heat recovery.

Alternatively, options may be explored for spinning industry to install low pressure plants to utilize dissipated heat from the main plant; (iii) relaxation may be given in import duties to attract further investment in energy related equipment; and (iv) current standards may be revised after two years to further improve efficiency of these plants.

According to sources, Ministry of Petroleum & Natural Resources has endorsed the suggestions of Ministry of Textile Industry and stands ready to work with them to draw up specific proposals.

Policy guidelines for energy efficiency audit for natural gas boilers are as follows: (i) natural gas consumption/bills will be analyzed against list of energy equipment and energy output; (ii) energy equipment would also be analyzed for their aging, energy efficiency and their improvement as well as deterioration etc; (iii) boiler size and power would be determined by the flow rate, pressure and temperature of the output steam; and (iii) in short following are the key factors to understanding efficiency calculations- flue gas temperature (stack temperature)- fuel specification- excess air- ambient air temperature and radiation and convection losses.

The procedure for conducting energy efficiency audit is as follows: (i) the respective gas company would inform the auditee minimum seven days in advance in writing about the energy efficiency audit; (ii) the auditee would nominate responsible, senior and competent staff to accompany the gas company energy efficiency auditor to conduct the audit.

The auditor will consult the auditee before initiating the audit for audit planning; (iii) the auditee would provide unrestricted access to the facilities and provide relevant information as requested by the auditor; (iv) the auditee would facilitate measurement and collection of data on as and when required basis; and (v) generally energy efficiency audit of every unit shall be audited annually for determination of energy efficiency and accordingly revision in tariff shall be applicable as per audit report of the respective unit. However, if considered necessary the gas company may also arrange energy efficiency audit other than scheduled or outsource to third party under their supervision.

Minimum efficiency requirement and some important technical spaces—A benchmark of combustion efficiency of Natural Gas boiler = 70 – 75 percent. The auditee may attain this benchmark by using/doing one or all of the following: (i) feed water economizers- air pre-heating- 3 percent O2 in flue gas; (ii) actual efficiency of gas boiler at full load = 75 percent;(iii) actual efficiency of  boiler at low load = 70 percent;(iv) technical lifetime of boiler = 25-40 years;(v) typical (capacity) size- small  10.4249 MMBTU- large = 10.4249 – 250.223 MMBTU and (iii) very large  250.223 MMBTU.

Based on the facts, the energy efficiency benchmarks would be as follows: (i) Gas engine generator set/gas turbine based Captive Power Plants (500 KW and above) with cogeneration system with jacket water or exhaust flue gases heat recovery utilization in their process should have efficiency of around 50 percent; (ii) gas engine generator set/gas turbine based Captive Power Plants (500KW and above) with cogeneration system with jacket water and exhaust flue gases heat recovery utilization in their process should have efficiency of around 60 percent; (ii) only spinning units of the textile industry would be exempted from waste heat recovery (cogeneration system) but their gas engine generator sets should have an efficiency of around 34 percent however all other units, except spinning industries, should have am efficiency of around 38 percent; and (iii) combined cycle power plant with a capacity of 50 MW and above should have efficiency of around 42 percent.

Sale of surplus power by CPPs and the associated NOC- Sale of surplus power by CPPs applicants to Distribution Companies (Discos) should be discouraged in all cases with a curtailment in allocated gas load.

In case a CPP applicant applies for an NOC to the respective gas company for sale of surplus power, the same would be issued after reassessment/ review of the case. CPP applicants would be allowed to sell not more than 25 percent of the surplus electrical power to distribution companies (for new customers).

Penalties for not meeting energy efficiency criteria – CPPs not meeting the efficiency requirement criteria would be given three months to improve and achieve the desired benchmark.

In case, they are not able to achieve the desired benchmark after lapse of three months CPPs /companies will he given option to pay a penalty (equivalent to tariff notified by Ogra) for next three months with a final notice of disconnection. In case of failure in achieving the desired benchmark in six months, effective from the initial notice date, natural gas supply would be disconnected.

In case of failure to achieve the required benchmark, the fine received shall go to Government Exchequer.

Moreover, all captive power units are liable to pay Rs.25000 to the gas companies for covering expenses of energy efficiency audit. MUSHTAQ GHUMAN

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