Under pressure

July 4, 2021

Massive layoffs and huge losses are feared as gas shortage crisis shakes up Sindh’s manufacturing sector

Under pressure

Exporters and industrialists fear that many industries in Karachi and Hyderabad may be forced to shut down given the massive shortage of natural gas in Sindh in June. This can seriously aggravate unemployment among industrial workers. Exporters and factory owners say they are worried that they may face serious challenges in meeting their deadlines as mills have been idle due to shortage of gas in industrial zones of major cities in Sindh.

Muhammad Jawed Bilwani of Pakistan Hosiery Manufactures and Exporters Association (PHMA) tells The News on Sunday (TNS) gas shortages since June 11 have halted export production. He says the crisis has caused hundreds of factories to shut down.

Bilwani says that gas pressure at industrial zones in Karachi was low or zero for 99 days out of 320 working days during the fiscal year 2020-21.

He says that textile exporters have re-gasified liquefied natural gas (RLNG) connections for which they pay Rs 1,533 per MMBTU to ensure that they can meet the export orders.

He says given the shortage there is a little chance that the textile export industries will get the required gas.

Bilwani says that the textile exporters are disappointed in the federal government and find the attitude of the Sui Southern Gas Company (SSGC) frustrating. Some industrialists, he says, have been compelled to shift their business to other countries where state and government policies allow them to work with dignity and expand their operations.

The current crisis has taken the industrialists by surprise as a shortage in summer months was quite unexpected. The situation has been blamed on low production of gas at some gas fields in the country. One of the major reasons, it said, has been Kunar Pasakhi Deep Field’s closure for annual maintenance in Tando Allahyar. The gas field is one of the country’s largest suppliers of natural gas. All told gas production in the country has fallen to 45 percent of the pre-crisis period. Low production has also been recorded in Mari Gas Field, Kandhkot Gas Field, Sotiyari Gas Field.

According to the Oil and Gas Development Company Limited (OGDCL) the shortage of gas is a countrywide issue. In the near future, it says there may be further complications as the demand- supply gap becomes wider. The number of gas users in the country is increasing on a daily basis but production has become stagnant, says an OGDCL official.

The official says the gas crisis will likely worsen over the next 10 years. He says things might come to a pass where gas will be available for only a few hours a day to the domestic consumers. “To overcome this problem, we have to find new resources,” he says.

Natural gas is essential for the textile industry, says Farhan Maqbool, the president of the Employees’ Union at Rauf Textile Mills. He says currently the gas pressure at Karachi’s industrial zones is very low. After 10pm, he says, the pressure becomes almost zero.

As many as 200 workers have been fired by Rauf Textile Mills as the factory has shut down, Farhan tells TNS. He says more than 600 employees of the mill have been fired over the last two years. He says the owner of the factory is worried as the factory’s operations have come to almost total halt due to the gas shortage and export orders have not been completed.

Farhan says it is clearly difficult for factory owners to pay their employees once work comes to a standstill. He says he is worried about his colleagues who are now without jobs and have families to feed. The government, he says, should work to resolve the gas shortage issue as soon as possible to save thousands of people from certain unemployment.

Daily-wage workers in the industrial zones have been facing a tough situation for almost two years, says Farhan. First, they were suffering on account of the Covid-19 lockdown and now the gas shortage has created a new threat to their jobs. He says nobody in the government appears to be concerned about the plight of the poor labourers.

Faisal Moiz Khan, the president of the North Karachi Association of Trade and Industry (NKATI) tells TNS that the so-called non-export industries are playing just as vital a role in the manufacture of value-added products.

“These industries are producing products to meet local demand. Non-export industries are as important as produce-to-export industries”, he says.

Khan says that they had held a meeting with the Sui Southern Gas Company (SSGC) officials and asked that they address the gas shortage issue. He said the SSGC officials had refused to restore industrial gas supply saying the production had declined.

“Prime Minister Imran Khan should take notice of the grim situation and order that gas supply to Karachi’s industries should be restored to save them from imminent disaster. He can save the workers from becoming unemployed”, he says.

Abdul Karim, 38, who works in a hosiery factory in Korangi industrial area, tells TNS that he was fired from his job last week after his factory was shut down due to the massive gas shortage. He says the factory owner has fired about 50 workers and paid their dues the next day.

“I was working at a stitching unit at the garments factory for the last three years. My salary was Rs 20,000 per month,” says Karim, adding that he has two children and is the only bread-earner in the family.

“I am worried as to how we will survive this difficult time,” he says.

“No one is willing to give me a job”, he adds. As factories continue to shut down, he says hundreds of people like him face the same threat.

“Almost 60 percent of the industries in Sindh Industrial Trading Estate (SITE) area of Karachi have closed down due to the gas crisis”, Abdul Hadi, the president of SITE Association of Industries tells The News on Sunday. The number is increasing with every passing day. If the gas supply is not restored promptly almost 100 percent of these factories will shut down soon, he warns.

“We are unable to complete the export orders on time as there is no gas in industrial zone,” says Abdul Hadi. He warns that a failure to meet contracted deadlines may result in huge economic losses. He says the manufacturers face losses worth billions of dollars as export orders for future dates might also be cancelled.

He says foreign buyers might start distancing themselves from Pakistani manufacturers and seek out other manufacturing partners in neighbouring countries. Abdul Hadi concludes that gas supply should be restored as soon as possible. He says traders are very disappointed in the government and fins the SSGC apathy frustrating.

Abdul Hadi says that a group of industrialists recently held a meeting with Governor Imran Ismail. Unfortunately, he says, the industrial sector is not being prioritised. If the government does not change its policies, he adds, the factory owners may shift their businesses to other countries where they get attractive facilities.

Safdar Khooharo, the Sui Southern Gas Company (SSGC) spokesperson, tells TNS that there is no gas shortage for industries that produce for local consumption in Karachi and Hyderabad. He says export industries, supplied from a different pool, are facing a gas crisis. The Kunar Pasakhi Deep Gas Field, he says, has been closed for annual maintenance. Gas supply from this field will be restored by July 9, he says.

Factory owners are worried due to the low pressure of gas in industrial zones in the rest of Karachi, he says adding that SSGC has closed about 50 percent of gas to general industries.

“We received 170 to 200 MMCFD gas from Kunar Pasakhi Deep field but due to temporary suspension from the gas field a gas shortage issue has occurred. It will be resolved in a week’s time”, says the SSGC spokesperson.

The writer is a freelance journalist based in Karachi. He can be reached on Twitter @Zafar_Khan5

Under pressure