Chairman – All Pakistan Textile Mills Association (APTMA) Southern Zon, Zahid Mazhar, has strongly rejected the recent extraordinary increase in gas tariff for the export-oriented industries and termed it detrimental for the textile industry, which is already suffering due to the high cost of doing business.
He said the current increase in gas prices of export-oriented industries by an unprecedented 118% i.e. from Rs. 1,100/MMBTU to Rs. 2,400/MMBTU would lead to a further decline in exports of Pakistan, especially textile exports.
He pointed out that the impact/ratio of the recent gas price increase is much larger on the textile industry in Sindh and Balochistan than in Punjab. He further pointed out that in the recent meetings with the Federal Minister for Energy and Minister for Commerce, it was informed that the natural gas tariff for both export process and export captive industries were to be the same, whereas, in the final announcement, the gas price for export captive industry is Rs. 300/MMBTU higher than the export process industry, which is discriminatory and against the understanding reached earlier.
He said that the recent increase in gas tariff coupled with high electricity charges would be a death knell for the industry already bearing the brunt of exorbitant markup charges and other inputs.
Mr. Zahid Mazhar further said OGRA, the Regulatory Authority for increases in oil and gas prices, has recommended increasing average gas prices to Rs.1350/MMBTU from Rs. 1,100/MMBTU i.e. an increase by only Rs. 250/MMBTU, but the government has increased gas prices for export-oriented industries by a whopping Rs. 1,300/MMBTU instead of Rs. 250/MMBTU. This massive increase in gas prices gives the impression that the government is not interested in supporting the export sector and is not the government’s priority.
Chairman – APTMA Southern Zone said that the textile industry in Sindh and Baluchistan is already suffering due to a lower supply of gas by SSGC and is operating at a capacity utilisation of around 60 to 65%, which means around 40% capacity is currently unutilised which is resulting in a loss of around 20% of exports. He further said that the massive increase in gas tariff for export-oriented industries would compel them to close their production as they cannot export inflation. Large-scale closure of industries would lead to a drastic increase in unemployment, which would not only create unrest in the economy but would also create a law & order situation, he added.
Mr. Zahid Mazhar said that progressively increasing the prices of electricity and gas at the behest of the international financial institutions is not in the best interest of Pakistan’s economy and export-oriented industries. He further said that the government should reduce the gas circular debt by eliminating gas theft and the problem of leakages instead of increasing gas prices, which would not only aggravate the miseries of general people but also hamper our exports, which is the need of the hour. He reported that UFG (Gas Losses) in Bangladesh is 2% while in Pakistan, it is around 13 to 14%; he questioned why the government is not concentrating on bringing UFG to the international level. He further said that the cross-subsidy in the gas and gas sector could not be made the responsibility of the export sector as they could not compete with the highest prices in the region.
He urged the government to review the decision to increase gas prices for the export sector and rationalise it immediately after taking note of the abovementioned matters; otherwise, it would prove to be the last nail in the coffin of the rapidly deteriorating Economy of Pakistan.