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Pakistan Textile Industry Gets to Keep the Lights On

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The Pakistan Electric Power Company (PEPCO) announced Tuesday that the textile sector will be exempted from load shedding. Load shedding is a power company euphemism for rolling blackouts, in which certain areas and industries have their power cut during peak periods, in order to compensate for an inadequate power supply.

Load shedding has heavily affected the textile industry, which lost an estimated $1 billion in business during the first 7 months of FY 2011 due to power shortages.  Capital costs and contract specifications require plants to run continuously in order to reliably recoup investments. As a result of load shedding, many plants have installed private generators. While this does allow for continuous operation, the added cost can be substantial and eats into already thin margins.

The order to stop load shedding came from the federal government. PEPCO also stated that companies will be required to reduce their peak demand by 25%, by switching off air conditioners and extra lights.

Pakistan has been plagued with blackouts, with all cities in Pakistan experiencing 10-16 hours a day of load shedding, according to Pakistan Today. This load shedding usually takes the form of an “hour on, hour off,” policy, which is severely disruptive to work routines. PEPCO faces a daily shortfall of almost 6000 megawatts, according to the Ministry of Power.

The utility has been heavily criticized in media for misleading customers about service improvements and new plant construction, and has been accused of badly mismanaging its finances. The Pakistani government is considering privatizing the utility companies in order to secure service improvements, but networks of patronage have thus far prevented this proposal from gaining traction.

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