KARACHI: The Spot Rate Committee of the Karachi Cotton Association on Friday has decreased the spot rate by Rs 100 per maund and closed it at Rs 12,200 per maund. The local cotton market remained stable on Friday. Market sources told that trading volume was low.
Cotton Analyst Naseem Usman told that the denial by the government to supply gas and electricity at regionally competitive tariff to the export industry has not only jeopardized the expansion in industrial base and investment that have so far taken place in the textile sector but also the $2 billion investment that is in the pipeline.
And under the latest scenario, the expansion in industrial base has virtually come to rest, as all the new equipment and feasibility was based on sustained gas/RLNG supply at regionally competitive rates to provide stable and reliable power.
This all has directly been conveyed to the prime minister of Pakistan by the APTMA chairman in his letter written on March 11, 2021. The letter, while berating the decision taken by CCOE on moratorium on gas/RLNG supply to Captive Power plants (CPPs) of the export oriented sector and highlighting the catastrophic impact on expansion of industrial base, informed the top man of the Government of Pakistan that industrialization that earlier picked up the momentum has now been halted.
"The expansion and investments in the textile sector are a direct consequence of your government's policy of Regionally Competitive Tariffs. Since under the CCOE decision, the gas supply to CPPs is being disconnected from March 15, 2021, so the momentum gained by this effective and progressive policy will be lost if the decision on captive power is not reversed.
Mean while according to Indian media Indian traders have ruled out chances of any immediate cotton exports to Pakistan saying that cotton from Brazil and African countries has already reached the western neighbour.
Against its domestic need of 1.5 crore bales each of 170 kg ginned combed cotton, Pakistan normally produces 50 lakh bales every year. A major importer of Indian cotton before the start of the border skirmishes, Pakistan has stopped all imports for the last two years. The ceasefire declared earlier this month reignited hopes of normal trade ties being resumed.
Given the severe shortage of cotton bales facing the country, industry sources had discussed the possibility of India exporting at least 10-12 lakh bales to Pakistan. However, chances now appear slim given the stiff opposition to Indian imports by a section of Pakistani spinners.
Unavailability of cotton yarn and non-payment of duty drawback of taxes and income tax refunds are adversely affecting the export growth putting millions of dollars export orders at stake. Government must accord immediate remedial measures as further delay will seize the industrialization, halt the export growth and lead to an unmanageable level of unemployment.
Talking to media here on Thursday, Chairman of the Pakistan Textile Exporters Association (PTEA) Muhammad Ahmad expressed grave concern over cotton yarn crisis.
Extreme shortage of cotton & unprecedented price hike of cotton yarn has almost disrupted the export cycle and textile industry has become economically unviable due to escalating prices on the back of short crop, he lamented. Cotton production is set to drop to a historic low during the year when demand is up by 13% with the textile sector operating at full capacity after decades, he added.
With low production, country needs to import cotton in an effort to bridge the demand-supply gap. Low cotton productivity and ban on cross-border cotton import has spiked the price of cotton yarn and textile exporters are forced to pay a higher price for raw materials.
He appreciated the Prime Minister Imran Khan for taking serious notice of cotton shortage and allowing the import from Afghanistan and Central Asian States via Torkham land route; however he considered it insufficient to meet the apparel industry's raw material needs as importing yarn from central Asian countries is not only expensive but will take one to two months to reach Pakistan. In order to overcome the scarcity of basic raw material, he demanded a cross-border import of cotton yarn from India to ensure continuity in export growth.
Moreover, All Pakistan Textile Mills Association (APTMA) has approached Prime Minister Imran Khan requesting him to reverse decision on moratorium of gas for Captive Power Plants (CCPs).
According to the government's decision, gas supply to CPPs will be disconnected from March 15, 2021. APTMA argues that a substantial number of mills have both gas and electricity connections while their power requirements are over Rs 5 MW. The additional loads are met through gas-based generation as the grid power alone is insufficient.
Recognizing this problem, Nepra recently allowed enhancement of load limits on B3 industrial connection from 5 MW to 7.5 MW without the installation of a new grid. Discos have refused to accept this decision of Nepra's.
Furthermore, many of our members have applications for enhancement of load pending with the DISCOS. Most have even paid for enhanced loads. Discos are not willing to acknowledge inability to supply or give in writing the pendency of the applications while SNGPL and SSGCL require such certifications in writing from the DISCOs to avoid disconnection on March 15 2021.
APTMA has requested that the decision be urgently revisited as the gas supply is scheduled to be disconnected on March 15, 2021. Nsaseem told that 400 bales of Daharki were sold at Rs 12000 per maund. Naseem also told that rate of cotton in Sindh was in between Rs 10,300 to Rs 11500 per maund. The rate of Phutti in Sindh is in between Rs 4500 to Rs 5100 per 40 kg.
The rate of cotton in Punjab is at Rs 12500 per maund. The rate of Phutti in Punjab is in between RS 4800 to Rs 6300 per 40 kg. The rate of Banola in Sindh was in between Rs 1600 to Rs 2000 while the price of Banola in Punjab was in between Rs 1800 to Rs 2250. The rate of cotton in Balochistan is Rs 12000 per maund. The rate of Phutti of Dalbadin Balochistan is available at Rs 6300 to Rs 6400 per 40 Kg.
The Spot Rate Committee of the Karachi Cotton Association has decreased the spot rate by Rs 100 per maund and closed it at Rs 1200 per maund. The Polyester Fiber was available at Rs 218 per Kg.
Copyright Business Recorder, 2021