SBP set to introduce TUFS to facilitate textile industry

RECORDER REPORT

LAHORE: State Bank of Pakistan (SBP) is set to introduce the Technology Up-gradation Fund Scheme (TUFS) of Ministry of Textile Industry this week to facilitate textile industry for further investment in the country.

Reliable sources said some positive developments are underway to promote industrial investment in the country. According to this facility, the federal government would reimburse 50 percent of markup subject to a maximum of 5 percentage point per annum, whichever is less for projects exceeding investment of Rs 10 million in machinery or technology. This notification was long overdue since 2009, announced as part of textile policy.

It may be noted that the federal government has already announced Rs10 billion for Export Development Fund (EDF) in the budget 2012-13, and is likely to be used to facilitate industry under TUFS.

The industry sources said the only missing ingredient would be energy to trigger industrial growth in country, which requires a 180 degree shift in government policy so far as usage of gas in country is concerned.

According to these circles, diverting gas from CNG sector to IPPs, fertilizer and textile would addresses the problem of circular debt, cost of electricity for general consumer, ensure cheap fertilizer to farmers and bring revival of textile industry in the country. They said an immediate shift of policy would address trade balance and revive the growth momentum in the country. Further, it would also be a win-win situation so far as employment, revival of stale capacities and poverty alleviation is concerned.

These circles said 2000 MW Furnace oil based Power Plants and closed IPPs be operate on gas by allocating 300 MMCFD gas of CNG sector. Also, 100 MMCFD gas be diverted to fertilizer industry from CNG sector to save subsidy on Import of fertilizer and 100 MMCFD gas be diverted to industrial sector to save the production exports and employment

So far as the sustainability of CNG stations is concerned, all these stations would be converted to LPG stations or LNG by importing LNG. They said 300 MMCFD gas can replace 30percent of HFO based generation from national grid with an extra generation of 1000 MW at lower cost.

It may be noted that Pakistan first introduced CNG in 1992, which is growing at a record growth @ 25 percent per annum in last 5 years and Pakistan has become number one in CNG vehicles in world with more than 25 percent share. Natural Gas Consumption's share has reached to eleven percent and the filling stations number has become more than 3500 with around three million CNG vehicles and so far Rs200 billion investments have been made in the sector.

However, growth in CNG usage has resulted into suspension of gas to industries of 180 days, 150 percent rise in power tariff, closure of industry at large scale- 40percent capacity impaired, exports value loss of at least $ 8 billion, increase in unemployment, adverse effect on agriculture sector, no foreign investment in industrial sector, power shortages & circular debt, increase in trade deficit and more than 100 percent increase in UFG.

The industry circles said immediate shift of gas from CNG to industry would raise exports of goods by $ 8 billion gradually; reduction in electricity load shedding, availability of electricity below Rs7/KWh, enough urea production for agriculture, reduction of urea price to Rs1000/bag, government can save Rs300 billion by removing subsidies, trade deficit would decrease by $ 5 billion, circular debt would be minimized and the UFG would come to the standard level of the world.