KARACHI: Zahid Mazhar, Chairman All Pakistan Textile Mills Association (APTMA) Southern Zone has strongly rejected the recent extraordinary increase in gas tariff for the export oriented industries and termed it would be detrimental for the textile industry which is already suffering due to high cost of doing business.
Zahid Mazhar in a statement issued to the print and electronic media said the current increase in gas prices of export oriented industries by an unprecedented 118 percent i.e. from Rs1,100/MMBTU to Rs2,400/MMBTU would lead to further decline in exports of Pakistan especially textile exports.
He pointed out that the impact/ratio of the recent gas price increase is much larger on the textile industry located in Sindh and Balochistan as compared to Punjab.
He further pointed out that in the recent meetings with the Federal Minister for Energy and Minister for Commerce it was informed that the natural gas tariff for both export process and export captive industries were to be the same, whereas, in the final announcement the gas price for export captive industry is Rs300/MMBTU higher than the export process industry, which is discriminatory and against the understanding reached earlier.
He said the recent increase in gas tariff coupled with high electricity charges would be a death knell for the industry which is already bearing the brunt of exorbitant mark-up charges and other inputs.
He further said Ogra, the Regulatory Authority for increase in oil and gas prices, has recommended to increase average gas prices to Rs1350/MMBTU from Rs1,100/MMBTU i.e. increase by only Rs250/MMBTU but the government has increased gas prices for export oriented industries by a whopping Rs1,300/MMBTU instead of Rs250/MMBTU. This massive increase in gas prices gives an impression that the government is not interested to support the export sector and it is not the priority of the government.
Chairman – APTMA Southern Zone said the textile industry in Sindh and Balochistan was already suffering due to lower supply of gas by SSGC and was operating at a capacity utilisation of around 60 to 65 percent that means around 40 percent capacity was currently unutilised which was resulting in a loss of around 20 percent of exports.
He further said the massive increase in gas tariff for export oriented industries would compel them to close their production as they cannot export inflation. Large scale closure of industries would lead to drastic increase in unemployment which would not only create unrest in the economy but would also create law & order situation, he added.
Mazhar said that progressively increasing the prices of electricity and gas on the behest of the international financial institutions was not in the best interest of the economy and the export oriented industries of Pakistan.
He further said the government should reduce the gas circular debt by eliminating gas theft and problem of leakages instead of increasing gas prices which would not only aggravate the miseries of general people but would also hamper the export which was the need of the hour. He referred that UFG (Gas Losses) in Bangladesh was two percent while in Pakistan it was around 13 to 14 percent, and questioned that why the government was not concentrating on bringing UFG at the international level.
He further said the cross-subsidy in gas the gas sector could not be made the responsibility of the export sector as they were not able to compete with the highest prices in the region.
Mazhar urged the government to review the decision of increase in gas prices for the export sector and rationalise it with immediate effect after taking note of the matters raised above otherwise it would prove to be the last nail in the coffin of the rapidly deteriorating economy of Pakistan.
Copyright Business Recorder, 2023