The APTMA has warned the measure hurts exports and risks permanent loss of business by its members.
By Staff Reporter
ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) Saturday aired an urgent appeal for the government of Prime Minister Shehbaz Sharif to lift a suspension of LNG for export oriented industries including the textile sector.
Media reports the other day said the government suspended the supply of gas to the export oriented industry until July 9, 2022. Taken with a view to divert more gas to the power sector for electricity generation, the decision is due for a review after the Eid-ul-Azha.
Dr Gauhar Ejaz, APTMA Patron-in-Chief said in a statement the supply of gas to the industry has been suspended from July 1 to July 8, following which there would be a six-day closure from July 9 to July 14 on account of Eid-ul-Adha. This 15-day shutdown will result in losses to the tune of USD 1 billion or more.
“More than 50 percent of output will be lost this month, with the very real risk of losing orders on a permanent basis as well as loss of repeat business due to delays In delivery of orders”, he said.
Pakistan’s last three attempts to secure an LNG cargo on the international spot market have met failure. This, combined with the fact that two LNG suppliers have gone back on about a dozen contracts over the last two years, has aggravated Pakistan’s energy crisis.
The crisis of suppliers wilfully defaulting on their contracts is rooted in the sky-high gas prices brought on by Russia’s invasion of Ukraine, which prompted European and other buyers to turn away from Russian supplies.
In July – one of the hottest months in Pakistan – the country will have only 8 cargoes of LNG against the demand of 12 cargoes. This puts the LNG deficit for the month at about 400mmcfd.
Gripped by this acute shortage of LNG, the authorities decided to divert all the available gas supplies to power plants with a view to mitigating the widespread and intermittent scheduled and unscheduled blackouts, clocking 6-14 hours a day in some areas.
Dr Ejaz said the textile industry has achieved a new record in terms of exports reaching nearly USD 20 billion from USD 12.5 billion just two years ago.
He said: “This fantastic growth was enabled by implementation of Regionally Competitive Energy Tariff (RCET), [and investment of over USD 5 billion in expansion and establishment of 100 new textile units resulting in enhanced export capacity of USD 500 million per month”.
“It is inexplicable that the exporting sector which has the capacity to deliver over USD 2.0 billion per month in exports is being denied [gas supplies]”, he said, and warned this will result in significantly lower exports.
“Textile exports were expected to increase to USD25 billion plus in the coming fiscal year. If this momentum is lost due to energy supply and cost constraints, Pakistan will be forced to seek additional USD 6 billion in loans from abroad which under the circumstances may not even be possible.
“Textiles have repeatedly delivered their commitments and proven that they are a viable and long-term solution towards economic stability. Under these circumstances, we request that the gas/ RLNG supply of export-oriented industry may kindly be restored immediately.”
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