Industry decries increase in gas tariff

Says it will jeopardise planned investment of $5 billion, establishment of 100 new plants

LAHORE:

The upward revision in gas tariff comes in contradiction of government’s commitment to ensure uninterrupted supply of gas and re-gasified liquefied natural gas (RLNG) to the industry at $6.5 per MMBTU, said All Pakistan Textile Mills Association (Aptma) Chairman Abdul Rahim Nasir.

Addressing a press conference at Aptma House, Lahore on Friday, he rejected the sudden hike in gas prices from $6.5 per MMBTU to $9 per MMBTU for export oriented units.

According to him, the Regionally Competitive Energy Tariff (RCET), implemented by the current government for the past three years, yielded outstanding results.

“The industry has delivered to the nation by investing Rs450 billion in machinery for capacity enhancement as per its commitment which resulted in an increase in exports by $500 million in each and every month in fiscal year 2021-22 so far,” he said. “However, the new projected investment of $5 billion, setting up of 100 new plants and creation of at least 500,000 new jobs will now be jeopardised.”

Nasir said the textile industry’s commitment to increase exports by $7.5 billion by the end of fiscal year 2021-22 over fiscal year 2017-18 has become a reality. He said that the present government’s visionary, progressive and pro-export policies enabled unprecedented textile export growth.

Citing figures, he highlighted that textile exports had surged by 27% in the first four months of the current fiscal year.

According to Nasir, a comparison of gas tariffs of the region with Pakistan, in a study conducted by PIDE, suggested that gas to the export-oriented sector was available at $4.05 per MMBTU in Bangladesh and $5.19 per MMBTU in India.

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

“An increase of $2.5 per MMBTU would result in around 5% hike in the final cost,” he added. 

Aptma Northern Zone Chairman Hamid Zaman, while speaking on the occasion, emphasised that the textile industry operated on a slim margin of 3-4% and the recent increase in the gas tariff would render Punjab’s industries uncompetitive and unserviceable not only for the global market but also locally.

Published in The Express Tribune, November 20^th, 2021.

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