Mills warn of chaos after gas closure

KARACHI:

Industrialists, on Monday, urged the government to address the issue of gas supply to the export-oriented textile sector, in Sindh and Balochistan, and save them from impending closure.

“The industries are in a state of shock at having received Sui Southern Gas Company Limited’s (SSGCL’s) notices of gas closure starting from November 15, 2022, to February 28, 2023,” the Karachi Chamber of Commerce and Industry (KCCI) and seven other industrial associations reacted in a joint statement.

The All-Pakistan Textile Mills Association (APTMA) Southern Zone Chairman, Zahid Mazhar, urged Prime Minister Shehbaz Sharif and Sindh Chief Minister, Syed Murad Ali Shah, to intervene and save the export-oriented textile industry of Sindh and Balochistan from total closure due to SSGCL’s denial of gas for four months.

A joint committee, consisting of KCCI, the S.I.T.E. Association of Industry (SAI), Landhi Association of Trade & Industry (LATI), Korangi Association of Trade & Industry (KATI), Federal B Area Association of Trade & Industry (FBATI), North Karachi Association of Trade & Industry (NKATI), S.I.T.E. Superhighway Association of Industry (SSHAI) and the Bin Qasim Association of Trade & Industry (BQATI), formed on gas issues suggested the government suspend gas supply for two days in a week during winter, and plan load management for every 12 hours on rotation basis so that industrial production can continue without a break, read the statement.

As the per statement, discussions to close 50% captive powerplants (CPP) were also held. The committee suggested that the industries with proper power/ electricity supply from K-Electric (KE) should close down CPPs 100% wherever possible, in view of the grave situation prevailing in the country.

While gas consumption should be closed for CPPs, and other measures of energy conservations also be adopted, the committee urged that gas supply be ensured to operate industrial boilers. Speaking to the Express Tribune, Insight Securities Energy Sector Analyst, Ali Asif said, “We believe the export-oriented sector needs a smooth supply of gas as they play a pivotal role in Pakistan’s economy. The private sector, however, must devise a solution as gas reserves are depleting each year.”

“Some export-oriented players have already started innovating and working on renewable energy, which will provide a cushion against gas shortages and higher energy prices,” he added.

According to the statement, the APTMA chairman lamented that, “The export-oriented textile industries of Sindh and Balochistan contribute over 54% to the total exports from Pakistan. They have been served notices of gas closure without having been taken into confidence as the real stakeholders, even though the two provinces produce more than 80% of the gas in the country.”

He added that, “Due to extremely low gas pressure and its frequent unavailability, it is very difficult for the industries, located in Sindh and the Hub industrial area, to run mills and fulfil their export commitments in time.”

Head of Research at Arif Habib Limited, Tahir Abbas told the Express Tribune that, “The government is prioritising gas availability during the winters given a surge in domestic demand, however, the concerns of textile sector should be addressed and some priority needs to be given to this sector keeping in view the country’s dependency on exports.”

The APTMA chairman further added, “The export-oriented textile industry runs 24/7 and almost all our member mills use natural gas as fuel for electricity generation to run our processing units or meet energy requirements. If we are forced to consume only 50% of the load, we will not be able to run our mills smoothly or fulfil our export commitments on time.”

“Resultantly, we will lose our hard-earned foreign clientele as well as the much-required foreign exchange that comes through our exports,” he explained.

“The APTMA member mills are very disturbed by SSGCL’s notices,” said Mazhar, adding that “Gas suspension for the export-oriented textile industry will be the final nail in the coffin of Pakistan’s economy.”

“This closure will lead to Pakistan defaulting on its foreign payments and the currency rate will deteriorate even further, reaching a point of no return,” he warned. “The government must take appropriate measures to ensure gas supply to export-oriented industries instead of opting for complete gas outages. This will lead to a huge decline in exports and revenue, including the closure of industries and layoffs,” cautioned Mazhar.

The APTMA chairman urged the government and gas companies to provide gas to the export-oriented industries first so export commitments are fulfilled on time. “Otherwise, they will be compelled to shut down their mills, resulting in a massive decline in foreign exchange earnings, rise in unemployment and deterioration of the law-and-order situation in the country,” said Mazhar.

Published in The Express Tribune, November 15^th, 2022.

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