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June 14, 2018

Mirpurkhas Sugar Mills plans Rs6.5bln investment in power, steel plants

Business

June 14, 2018

KARACHI: Mirpurkhas Sugar Mills on Wednesday unveiled a plan to set up bagasse-fired power plant and a steel rebar manufacturing facility with a combined cost of Rs6.5 billion.

The company decided to set up a captive dual fuel power plant of 26 megawatts to supply electricity to the sugar mills and its various businesses, it said in a statement to the Pakistan Stock Exchange.

“Keeping in view the boom in construction activities in the country and taking advantage of the availability of power based on bagasse, the board of directors of MSM (Mirpurkhas Sugar Mills) has decided to establish a steel rebar manufacturing plant,” it said. “The plant will have melting and re-rolling capacity of 150,000 to 200,000 tons per annum. The power project along with steel plant will be established at a cost of approximately Rs6.5 billion.”

The firm said it set up a 100 percent-owned subsidiary by the name of Mirpurkhas Energy Limited (MEL) to produce power from bagasse.

“In this regard, MEL applied for, and received letter of intent, generation licence and consent for power supply to the national grid successfully,” it added. National Electric Power Regulatory Authority (Nepra) had also awarded upfront tariff along with letter of support from Alternate Energy Development Board.

Subsequent to the award of tariff by Nepra, the power purchaser the Central Power Purchasing Agency (CPPA) filed a review petition with Nepra against the award tariff. Although Nepra dismissed the review motion filed by CPPA against the tariff, it did not make any change with respect to the date of commercial operation date, which was kept from the date of award of upfront tariff. CPPA has also filed a petition in the Islamabad High Court against the Nepra decision, which is being contested by the company. “Given the complexities involved and expected delays as explained above, the board of directors of the company has decided against pursuing the MEL project,” the sugar mill said.

“Establishment of steel project along with power plant will allow the company to diversify its business operations. Furthermore, it will increase revenues for the company, which is expected to enhance its profitability, thus enabling it to provide adequate return to its shareholders. The project will take approximately 24-30 months to become operational.”

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