Hike in gas tariffs to trigger industry’s closure: VATEA

KARACHI: Textile makers-cum-exporters on Monday called the ECC’s proposed hike in the gas tariffs unjust and unwise, rejecting the 87 percent surge proposition as exorbitant to trigger the industry’s closure.

Reacting to the Economic Coordination Committee’s (ECC) proposition to the government for making gas further costlier by 86.5 percent namely from Rs1100 mmbtu to Rs2050 mmbtu, the textile exporters dubbed it as sabotaging the apparel export sector.

“The ECC’s proposed exorbitant hike of 86.5 percent in gas tariffs to Rs2050 mmbtu for the export sector is highly unjust and unwise,” Chief Coordinator, Value-Added Textile Exporters Associations, Javed Bilwani said. The proposed increase in gas tariff is feared to drive the export industries to closures, which may trigger export fall and unemployment, he warned, saying that the local businesses need incentives instead to rejuvenate.

Saving the government’s owned companies for instance the SSGC and SNGP by giving rise to the gas tariffs at the cost of entire export sector is “highly deplorable”, he said.

He criticized that the fertilizer sector has been unduly favoured with the gas tariffs, which he said, never caused the trickle-down effect to benefit the farmers in the country.

To the federal energy minister’s question as to why exports could not grown at the gas tariffs of Rs1100 mmbtu, Bilwani replied that the required amount of the utility was never supplied to the industry to operate at full capacity. With two gas holidays a week, he said that the industry continues struggling to find the required supply with an appropriate pressure to run the output process in the remaining days.

The gas pressure problem runs for 17 hours a day, he said and pointed out that there are some zones in Karachi, which even do not receive a bit of the utility in entire year, leaving the exporters high and dry to produce desired output.

Showing concerns, he said that the proposed gas prices increase is as higher as Rs2600 mmbtu for the general industry, up by 117 percent. “Tariffs proposed by the Ogra were much lower than those by the ECC,” he said.

He feared that the proposition also entails a 10 percent blended cost of RLNG, which will make it costlier to Rs2300 per mmbtu for the export sector industry.

This increase if takes place will have a negative effect on the country’s overall exports and will leave Pakistan’s textile products uncompetitive on the global markets.

“In Bangladesh UFG is 2 percent while in Pakistan it is 13 percent to 14 percent,” he said and questioned that what stops the concerned authorities from regulating the UFG. He felt a political intervention behind the matter.

Bilwani appealed to the interim prime minister to help solve the matter and invite the stakeholders for a consultation to evolve a long term plan to avoid exports fall.

Copyright Business Recorder, 2023