ISLAMABAD: All Pakistan Textile Mills Association Southern Zone Chairman Zahid Mazhar has strongly opposed the recent 118 percent hike in gas tariffs for export-oriented industries.
In a statement, he said that the abrupt increase from Rs. 1,100/MMBTU to Rs. 2,400/MMBTU could severely impact the struggling textile sector, particularly in Sindh and Balochistan, already grappling with high operational costs.
He highlighted that such a drastic rise would inevitably result in a further decline in Pakistan’s exports, particularly in the textile sector. Mr. Mazhar also pointed out that this increase disproportionately affects the textile industry in Sindh and Balochistan compared to Punjab.
Mazhar criticizes the government’s approach, as it deviates from earlier discussions, where it was agreed that the natural gas tariff for both export processing and export captive industries would be the same. However, the final announcement revealed a Rs. 300/MMBTU difference in favor of export process industries, which he deems discriminatory.
Unprecedented Gas Price Increase Hits Export-Oriented Textile Industries
The significant surge in gas tariffs, coupled with high electricity costs, threatens the textile industry’s survival, already burdened by exorbitant interest charges and input costs. Additionally, the government’s decision to increase gas prices by Rs. 1,300/MMBTU for export-oriented industries, in contrast to OGRA’s recommended Rs. 250/MMBTU raise, suggests a lack of support for the export sector.
The textile industry in Sindh and Baluchistan faces challenges due to inadequate gas supply, resulting in an operational capacity of only 60 to 65 percent and a loss of around 20 percent in exports. The gas tariff hike may force these industries to close, leading to increased unemployment and potential economic instability.
Mazhar urges the government to reconsider the gas tariff increase, focusing on addressing gas theft and leakages to reduce the circular debt. Neglecting these issues could exacerbate the hardships of the public and hamper the export sector, which is vital for Pakistan’s economy.
He also highlights the need to address Unaccounted for Gas (UFG), which is significantly higher in Pakistan than in other countries. Lastly, he emphasizes that the export sector should not bear the burden of cross-subsidies in the gas industry, given its struggle to compete with higher regional prices.
