Pressure tactics for gas supply: MoP concerned over U-turns by textile sector

RECORDER REPORT

KARACHI: The Ministry of Petroleum and Natural Resources has expressed deep concern over the U-turns in policies of textile sector associations in the country, which had agreed to gas supply of four days per week in a stakeholders' meeting held in Islamabad on November 17.

Official sources said that as per the agreement in the meeting the textile sector is getting gas four days per week. This is despite the fact that gas supply agreement with textile sector clearly states that it would get gas for only nine months in a year and, in winter season, when local consumption increases manifold, the textile sector is supposed to switch to alternative fuels such as diesel and furnace oil, etc.

Sources said that agriculture sector is worried about the move of the textile sector which is applying pressure tactics on the government to receive gas. Industrial sector is well aware that gas is not the only option as fuel for textile or power sector in the country. Gas is used in industrial sector, especially in textile, as a cheaper source of energy, and they get it throughout the nine months in a year as per the agreement. Demanding extra gas in winter is unjustified and merely an act of increasing profitability even though they could switch to diesel and furnace oil in the winter and let the masses and agriculture sector benefit from it.

Government, farmers, power sector and other industrial sectors of the country know that in winter theydo not get gas for three months and that is the reason why government has diverted 76 mmscfd gas from power sector to fertilizer sector which does not have any alternative source to gas.

Sources said that the government is offended by U-turns and unending demands of some industrial associations in the country which had agreed to the winter gas load management plan in a meeting last month but are now running media campaigns asking for extra gas, against the agreement in place.

The government had given assurance to the fertilizer sector that to meet with the urea demand for Rabi season the government would continue to supply gas to the fertilizer industry till December 31, 2011. Based on the assurance by the government the fertilizer industry reduced the per bag urea price to Rs 1,480 from previous Rs 1580.

Sources claimed that 50 kg urea bag had touched the highest official price of Rs 1900 per bag but the government's better and timely policies brought the price down to Rs 1480 per bag and urea prices are expected to come down further in the market due to increased gas supply resulting in more urea production.

Sources in agriculture sector say that the country is in the middle of wheat sowing season and yet it is faced with a urea shortage crisis. Urea shortage started with the gas curtailment to fertilizer sector, which began in April 2010, and till date the fertilizer sector has been subjected to 55 percent curtailment as against 40 percent or less curtailment to other manufacturing industries in the country.

Sources said that textile industry knows that fertilizer sector has no alternative to gas, which is used as raw material to produce fertilizer, and the entire agriculture sector and millions of farmers are dependent on fertilizer for producing different crops in the country including all-important cotton crop through which textile sector runs its looms. It is more a matter of profitability and indifferent attitude towards other sector of the industry, they claimed.

Analysts said that it is cheaper to import diesel which costs $ 22 per mmbtu (unit of energy) compared with importing urea which costs the taxpayers and the government $34 per mmbtu. To look at it in another way, it is cheaper for the country to save heavy foreign exchange by not importing urea and instead importing diesel and furnace oil for industry, especially for textile and other industries which could use alternative fuels such as diesel and furnace oil for generating electricity, but the fertilizer plants have no substitute of gas as they use the gas as raw material to make ammonia for production of urea.

The government should give some kind of incentive to the textile sector for switching to diesel and furnace oil for 3 months during the peak winter season. It makes sense to give gas to fertilizer plants which do not have any other alternative to gas and ensure food security in the country by providing the farmers much needed fertilizer for current Rabi season, they said.

Sources warned that textile industry should realise the fact that if agriculture sector is hit by their unending demands for gas, they would be the biggest sufferer as no or less urea would badly affect agriculture output and cotton crop production would also come down, hence creating a shortage of cotton. Thus, it is a self-threatening policy for textile sector itself.

The government is under immense pressure by the farmer community which is faced with urea shortage for Rabi season.