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January 31, 2020

High power tariff forces textile millers to squeeze production

National

January 31, 2020

MULTAN: The south Punjab contributes lion’s share of cotton to run the country’s textile sector, but the manufacturers of the region have squeezed production due to high cost of production. The textile and spinning mills used to run round-the-clock in three shifts in peak season, but a large number of manufacturers have closed one shift and sacked workers due to high power tariff and cost of production. The textile manufacturers have expressed their helplessness in competing with the world markets.

Talking to The News, Multan Chamber of Commerce and Industry president Sheikh Fazal Elahi said that the textile and spinning sectors were mainly hit in the cotton belt area due to high power tariff. The country's exports would not be able to compete with China, Bangladesh and India where power tariffs were seven to nine cents, he said, adding that the textile industry had taken a sigh of relief when the present government announced regionally competitive electricity tariff at 7.5 cents for the export-oriented sectors and it led to new investment and revival of closed units of textile sector, besides generating 500,000 additional jobs. He said that the export-oriented industry could not sustain exports on inflated electricity bills, therefore, the government must resolve this issue without any delay.

Spinners told The News that the spinning was an export-oriented sector, but it was facing a critical burden of increased electricity tariff up to 70pc. The government was charging high rate of surcharges against the cost of actual electricity consumed, they said, adding that the spinning sector would be unable to compete with China in the coming months.

The government had ended subsidy on electricity due to which tariff for textile was increased by Rs 8 per unit along with other industries and now the electricity was available for the textile sector at Rs 20 per unit instead of Rs 12 per unit.

The powerloom owners observed that the exports were going to suffer heavily due to the increase in electricity tariff, which had decreased cotton trade volume. Pakistan Powerloom Owners Association chairman Khaliq Qandil said that high cost of electricity had almost destroyed the exports.

He said that the government had promised charging fixed gas tariff and consequently they shifted their entire heavy electricity generators to gas by incurring huge cost, but now the government had increased gas tariff at unaffordable level. Now, all the manufacturers were facing gas loadshedding. He said that all production units had been shut so far, leaving thousands of workers unemployed. He added that Pakistan currently needed 14 million bales of cotton, but production was eight million bales. He said that the powerloom owners must import cotton to make up for the shortfall of four million bales.