Textile industry concerned over planned rise in gas rate

KARACHI: Pakistan’s textile industry has been largely insulated from the prolonged power shortages gripping the country since decade, and a recent move to increase gas tariff will further dent productions and export earnings, industry officials said on Wednesday.
The government planned to increase gas tariff by 53 percent for industrial users.
Textile mill owners said they may miss the production and export targets if the government increases gas tariff.
Textiles and cotton account for nearly 58 percent of the country’s exports and are a major source of foreign exchange for its fragile economy, kept afloat by a $6.64 billion International Monetary Fund loan secured in 2013. The industry also provides employment to 15 million people.
“Around 30 percent textile industrial units have been closed down since April 2014 so far in Punjab (on gas shortages),” said S M Tanveer, Chairman, All Pakistan Textile Mills Association (APTMA).
“Currently, most of the mills are getting gas supplies for only six hours in a day.”
Industry officials said smaller units are either at the verge of closing down or are forced to curtail their operations on gas shortages.
Chairman APTMA said electricity shortages forced the sector to set up captive power plants to meet their export orders.
Industry experts said the government is making the gas prices expensive for the industrial consumers in order to improve the financial health of the loss-making gas distribution companies—Sui Southern and Sui Northern.
“Gas companies’ losses have increased due to their inefficient transmission and distribution system, including theft and line losses. Therefore, increase in the prices for the indigenous power resource—captive power plant does not make any sense,” said Tahir Basharat Cheema, Energy Advisor to APTMA.
Cheema said around 800 companies are being operated by captive power plants (CPPs) to get uninterrupted supply of power.
M. Jawed Bilwani, Chairman, Pakistan Apparel Forum said the country “has one of the highest industrial gas prices in the region.” (And) all the CPPs, installed in the textile export manufacturing units, run on natural gas.”
Economist Dr Hafiz A Pasha believes the government is under pressure from the International Monetary Fund (IMF) to hike the gas prices.
“The government in its latest letter of intent to the IMF envisaged fiscal adjustment in the current fiscal year is underpinned by tax revenue measures and further rationalisation of energy subsidies,” he said.
“The government should give priority to the exported oriented large scale manufacturing industries like textile instead of non-exporting industry fertiliser with regard to stable energy supplies, as it is often as the barometer for the foreign exchange earnings and growth to GDP,” Pasha said.