Chairman of All Pakistan Textile Mills Association, Southern Zone, Mr Zahid Mazhar, has drawn the government’s attention that the textile industry of Sindh and Balochistan are presently compelled to close their production or operate at 50 percent of their production capacity due to a severe shortage and disruption of gas supply along with low gas pressure. This is despite the government increasing the gas tariff in February 2023 by around 30 per cent.
He said that the gas supply shortage to the export-oriented textile industry of Sindh and Baluchistan had created havoc resulting in the closure of several industries and a massive decline in the growth of large-scale manufacturing and textile exports. He added that textile exports from July 2022 to April 2023 have declined by over 14% compared to July 2021 to April 2022.
He also highlighted that the provinces of Sindh and Balochistan produce around 85 percent of the total natural gas produced in the country. However, they are denied their rights guaranteed under Article 158 of the Constitution of Pakistan. He demanded that the gas being produced in Sindh and Balochistan should first be supplied to these provinces and, after fulfilling the requirement of Sindh and Balochistan, the surplus be provided to other provinces. On the contrary, the gas of the two provinces is being supplied to Punjab, which is against Article 158. He further said that the textile industry is facing the problem of weekly closure of Gas for two days and the problem of low Gas pressure throughout the week. This is resulting in heavy production losses, de-industrialization and unemployment.
Mr Zahid Mazhar further said that the gas supply suspension to the Sindh-based industry contributing 52 per cent to the country’s total exports results in a colossal loss of foreign exchange and revenue.
Mr Zahid Mazhar requested the governments of Sind and Balochistan to take serious notice of the shortage and low pressure of the gas on an urgent basis and issue instructions to SSGCL to ensure continuous and uninterrupted gas supply to the industry of Sindh and Baluchistan in the general and export-oriented sector, in particular, otherwise more and more industries would be compelled to close their operations which will create not only irreparable losses to the economy of Pakistan but would also generate law & order situation due to unemployment of a large number of workers employed in these industries.
Meanwhile, AKD Research has reported that the Textile group exports clocked in at US$1.2bn in Apr’23, lower by 2.0%MoM and 29.1%YoY. This takes the textile exports for the 10MFY23 period to US$13.7bn, lower by 14.2%YoY.
Value-added textile exports saw a paltry 0.9%MoM decline while being lower by 28.5%YoY. Within the value-added group, the knitwear segment saw a 3.3%MoM increase, while Bed wear segment saw a hefty rise in 10.8%MoM, coming in at US$218mn.
The growth in the knitwear and bedwear segments was offset by the dip in Readymade Garments, which experienced a sequential decline of 10.5% in Apr’23, coming in at US$247.4mn.
International cotton prices have been tapering off recently, with the COTLOOK Index dropping by 8% over the past month alone. On the local front, cotton prices have increased in the past 30 days, wherein prices have increased by 4% to PkR20k/maund.
The challenging situation for the textile sector persists, with the heightened energy and raw material costs coupled with low average prices and quantity exported making for a precarious situation for the industry. Hence, we advise investors to steer clear of the sector.