Discrimination allegations: Why Punjab’s textile industry is worse off than Sindh’s

The province gets less gas, but also uses it less efficiently.

LAHORE: Is Punjab Chief Minister Shahbaz Sharif’s allegation true that his province’s industry is being discriminated against when it comes to electricity and gas? The short answer is yes, though it deserves several caveats.

At first glance, the numbers are staggering. Punjab’s industry faces 12-hour power cuts and gets gas for their captive power plants for five days a week during the summer and only two days a week during the winter. Most industry experts estimate that at least 50% of the province’s textile manufacturing capacity is currently idle. No new textile machinery has been installed anywhere in Punjab in over two years.

The All-Pakistan Textile Mills Association, the industry’s biggest lobby, estimates that 20% of all textile companies that were operating in Punjab four years ago are now gone. The Pakistan Textile Exporters’ Association, another lobbying group, estimates that 400,000 workers in Punjab have been unemployed as a result of power outages forcing mills to shut down or cut their workforce.

Most of the industrialists who spoke to The Express Tribune supported Sharif’s claim that the federal government, run by the Pakistan Peoples Party, was discriminating against Punjab, run by its rival Pakistan Muslim League Nawaz.

“When we export, we put a ‘Made in Pakistan’ label, not ‘Made in Punjab’, so why are we being discriminated against?” asked Sheikh Mukhtar Ahmad, chairman of Sadaqat Ltd, Faisalabad-based textile exporter.

And many are furious that the federal government seems to be treating its political base in Sindh more favourably. “The increased cost of doing textile business in Punjab has made us uncompetitive not only at international level but also in the local market,” said Mian Anjum Nisar, a Lahore-based textile industrialist. “The situation is much better in Sindh. There is a clear difference in cost of doing business in Punjab and other provinces which is another setback for us.”

But all of this griping leaves out important context. Punjab’s power shortage is worse than Sindh because Sindh’s power plants run on cheaper natural gas, compared to many of Punjab’s, which are forced to run on furnace oil due to a shortage of natural gas in the province. Sindh produces 71% of all gas in the country and thus has a surplus. Punjab produces less than 5% and thus has a severe deficit. State-owned utilities cannot bill the full cost of the oil-fired power stations, and hence deal with the situation by simply shutting down.

What little gas Punjab gets is also siphoned mostly to the captive power plants run by the province’s richest industrialists. This also happens in Sindh, but to a lesser extent. The federal government is trying to provide more gas to Punjab’s utility companies, but progress on this front has been slow.

(With additional reporting by Imran Rana in Faisalabad)

Published in The Express Tribune, August 27^th, 2012.