Textile industry rejects gas price hike, large-scale closures and unemployment feared

Addressing a hurriedly-called press conference at the APTMA House Lahore, Nasir said the upward revision in gas tariff is in contradiction of the commitment given by the federal government for continuous supply of gas/RLNG on $6.5/MMBTU. 

Chairman Northern Zone Hamid Zaman, Senior Vice Chairman Kamran Arshad and Secretary General APTMA Raza Baqir were also present. 

According to the APTMA chairman, the Regionally Competitive Energy Tariff (RCET) provided by the current government over the past three years has yielded outstanding results. The industry has delivered to the nation by investing Rs450 billion in machinery for capacity enhancement as per commitment.

This has resulted in an increase of $500 million in exports each and every month in FY22 so far.

But the new projected investment of $5 billion, setting up of 100 new plants and addition of at least 500,000 new jobs with 90 percent of them in Punjab would all be jeopardized, he stressed. 

He said the textile industry's commitment to increase exports by $7.5 billion by the end of fiscal year 2021-22 over the fiscal year 2017-18 has become a reality.

He said the present government's visionary, progressive, and pro-export policies have enabled unprecedented textile  export growth. The textile exports have increased by 27 percent in the first four months of the current fiscal year. 

According to him, a comparison of gas tariff in the region with Pakistan in a study conducted by PIDE suggests that gas to the export-oriented sector is available at $4.05/MMBTU in Bangladesh and $5.19/MMBTU in India. 

 In the textile sector, he said, the component of energy costs account for roughly 18% of final product value.      

“An increase of $2.5/mmbtu would result in around 5 percent hike in the final cost,” he added.  

Speaking on the occasion, Chairman Northern Zone Mr. Hamid Zaman emphasized the point that the textile industry operates on very slim margin of 3 to 4%, and the present rise gas tariff only for the industry located in Punjab would render it uncompetitive and unserviceable not only globally but also in the local market. 

It will lead to large-scale closures and resultantly unemployment, Zaman apprehended. 

He said the tariff increase only for industries in Punjab is also against the principle of promissory estoppel which protects previous agreements and contracts. 

Senior Vice Chairman APTMA Northern Zone Mr. Karman Arshad said more than double the gas price difference between Punjab and Sindh would promote parochialism and damage national harmony. 
 
Punjab is being rapped and penalized through abnormal increase in gas tariff rendering it in competing against other provinces, he said and added that a wide gulf between the gas prices of Punjab and rest of the country would lead to national disharmony and jeopardize the sustainability of textile business in Punjab.

The APTMA leadership has expressed the hope that Prime Minister Imran Khan would take stock of the situation and restore Regionally Competitive Gas Tariff of $6.5/MMBTU for Export Oriented Unit Sectors to avoid any eclipse to the growing export market.