‘Hike in RLNG price in Punjab to hurt textile exports’

ISLAMABAD: With an increase of $2.5/mmBtu in the price of RLNG for the industries in Punjab, the booming textile export of the country is likely to be severely affected.

As much as 70 percent of textile products of the country are produced in Punjab, where RLNG’s price has been increased from $6.5/mmBtu to $9mmBtu. In addition, giving a presentation on gas load management, the energy ministry has recently intimated in the CCOE meeting a cut from December 15 in the gas supply to captive power plants for export industry in Punjab.

“We have expanded the industrial footprint in textile sector by investing billions of dollars keeping in view the regionally competitive energy prices (power tariff at 7.5 cents per unit and RLNG $6.5 per MMBTU) but now the government has hiked the RLNG rate to $9 per MMBTU and power tariff to 9 cents per unit. This has not only endangered the investment in the textile sector, but also exposed the increasing momentum in textile exports to many risks,” Hamid Zaman, Chairman Punjab Textile Association, told The News.

The textile industry in Punjab is facing discriminatory treatment from the federal government as gas tariff for industrial units in Sindh, KPK, and Balochistan is fixed at $4.87/mmBtu but for Punjab the gas tariff hovers at $9/mmBtu.

“This is vividly discriminatory and is tantamount to spelling the end of the industrialization drive in Punjab,” he maintained, adding, “The textile exports have increased by 30 percent but the higher than regionally comptetive gas tariff may dent the exports target of $21 billion for the current fiscal year."

Zaman argued that the increase in RLNG tariff for Punjab-based export industry would make the products uncompetitive in the domestic as well as international market while loadshedding would result in production losses and delays. “Who will purchase the products of Punjab-based industry,” he posed the question.

“The textile industry operates on a very slim margin of 3 to 4%, thereforem increasing the cost will result in liquidity issues. The higher cost will render the textile industry in Punjab uncompetitive and unserviceable locally and internationally and cause a large scale unemployment and further precipitous drop in exports.”

“Owing to intense competition among regional countries, a minor cost difference brings an exponential impact on the international market. Increase in energy tariffs will undermine the entire industry’s efforts and offset the economic progress made over the past year, as the textile industry will struggle to remain productive under the pressure of unsustainable high energy tariffs,” he added.

He mentioned majority of the mills at present cannot fulfill the energy needs for power or gas alone and require both to function at full capacity. Furthermore, around 80 percent of the RLNG captive plants are cogeneration and use steam and hot water in the production process.