Energy crisis in Strait of Hormuz could hit Pakistan’s exports: APTMA

The All Pakistan Textile Mills Association (APTMA) on Wednesday voiced concerns that Pakistan’s export and industrial sectors are facing mounting risks as the ongoing geopolitical crisis in the Strait of Hormuz disrupts the supply of oil and liquefied natural gas (LNG), driving energy prices higher and threatening the country’s power security.

In a letter addressed to Minister of Commerce Jam Kamal Khan and other government ministers, including Minister of Energy Awais Ahmed Khan Leghari, Minister for Petroleum Ali Pervaiz Malik, and other officials, the APTMA urged the government to take immediate measures, including suspending levies on fuel oil and boosting domestic gas production, to safeguard energy availability and protect export competitiveness.

“We write to draw your urgent attention to the ongoing geopolitical crisis in the region and the disruption of shipping through the Strait of Hormuz. This situation is constricting the supply of oil and LNG to Pakistan and poses serious risks for the power sector and for the industry’s energy security,” read the letter.

APTMA noted that the sharp rise in energy prices is expected to widen Pakistan’s current account deficit, while supply availability itself remains uncertain.

“At the same time, higher energy costs will directly affect the competitiveness of the export sector. This creates a double impact on the economy: the dollar value of imports will rise significantly while exports, which are already under pressure, will face further risk,” APTMA warned.

The association was of the view that even if the conflict stabilises in the coming weeks, disruptions in energy supply chains and prices are likely to persist for several months, which creates a serious concern for export industries.

APTMA urged the government to immediately suspend the carbon levy and the petroleum development levy on RFO on an urgent basis.

“This would make RFO a financially viable option for captive power generation for export industries. Given the current disruption in international supply lines, export of surplus RFO is also unlikely in the near term, ensuring sufficient supply in the domestic market,” it said.

Moreover, APTMA also called for the removal of the cap on production from domestic gas fields and allocation of additional domestic gas to the power sector.

Gulf conflict hits Pakistan fertiliser sector as Agritech shuts urea plant

“The power sector currently relies heavily on imported LNG, particularly from Qatar, whose supply is facing serious disruptions in the present crisis. In this context, increased production from domestic gas fields and its allocation to the power sector would allow greater power generation from local resources and help reduce reliance on the uncertain supply of expensive imported LNG during the current crisis,” it said.

The APTMA urged the government to take timely action and prevent a further decline in Pakistan’s export earnings during a period of external stress.