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Bad news for Punjab: Textile industry will not get gas from December 1st


News Analysis |

In a shocking disclaimer, the primary domestic and industrial gas provider, Sui Northern Gas Limited (SNGPL) has refused to supply 150 MMCFD system gas to Punjab-based textile industry for at least two and half months starting from December 1, 2017, GVS confirmed. In a an instantaneous retort to the SNGPL’s decision, All Pakistan Textile Manufacturers Association (APTMA) has stated that this decision was going to be counterproductive for both partisans and will further increase the already too outrageous cost of doing business in Punjab, by forcing its export industry to turn towards more expensive RLNG.

The price of RLNG for November 2017 has already reached over $ 9.5557/ MMBTU (equivalent Rs 1,006.45 per MMTBU). System gas is available in other provinces at Rs 600 per MMTBU for 365 days a year.

“The government wants to revive the confidence of the textile sector through the package,” a source within the commerce ministry said, adding that the package would be expanded to other industrial sectors, including the pharmaceuticals.

The textile exports from the country had witnessed a growth of 7.72 percent during the first four months of the current fiscal year compared to the corresponding period of last year. The textile exports during July-October (2017-18) were recorded at $4.390 billion compared to the exports of $4.075 billion during July-October (2016-17), showing growth of 7.72 percent, according to the latest data of Pakistan Bureau of Statistics (PBS).

Read more: Non-Textile exports: Pakistani industry coming back to life?

The textile commodities that contributed in positive growth in trade included raw cotton, exports of which grew by 46.69 percent during the period under review. Raw cotton worth $42.564 billion was exported from the country during the current year compared to the exports of $29.016 million last year.
With the latest bombshell that the SNGPL has dropped over the textile spectra in Punjab, experts believe that the rising export growth rate is bound to drop.

“This decision, if implemented, would unfortunately reverse the export growth of approximately 8 percent achieved in the first four months of the current fiscal year,” said the member’s board of APTMA.

The government had announced in November 2016 to reduce gas prices by 33 percent for the industrial sector. However, the decision was reversed the very next month and the subsidy was reverted towards the power sector, including public-sector power plants and independent power producers (IPPs), to give some relief to the textile industry in Punjab in terms of electricity.

Last year, the Petroleum Ministry had also ensured 28 percent gas quota during winter to Punjab enabling its industry to use a combination of system gas and RLNG to reduce the consequent price variation.

The government had announced in November 2016 to reduce gas prices by 33 percent for the industrial sector.

Last month, the chairman APTMA, Pervaiz Malik, at a meeting that was presided over by the Minister for Commerce and Textile said that the dilemma of provincial disparity of gas prices should come to an end.
According to the Chairman, there is coal tax, caustic soda tax etc and no system of adjustment; he suggested that zero rating policy be extended to facilitate the industry.

Read more: “Anti-industry” policies of the government: Textile Association to protest

The Federal Minister for Commerce and Textile reassured that the government has already taken bold steps to reduce the cost of doing business. He said that the government has limited resources and within those limitations, the ministry has to develop its proposals.

The government in November, announced to disperse Rs 11.44 billion among the textile sector against claims for Rs 20 billion through the State Bank of Pakistan under the Prime Minister’s Trade Enhancement Package till November 22nd, 2017, a commerce ministry’s senior official said here on Tuesday.

Last month, the chairman APTMA, Pervaiz Malik, at a meeting that was presided over by the Minister for Commerce and Textile said that the dilemma of provincial disparity of gas prices should come to an end.

The Rs 162 billion Trade Enhancement Package was supposed to help the textile sector to gain competitiveness in the international market in order to enhance the country’s exports, quoted an online publication. “The government wants to revive the confidence of the textile sector through the package,” a source within the commerce ministry said, adding that the package would be expanded to other industrial sectors, including the pharmaceuticals.

Read more: Ittefaq Textile Mills to be auctioned over default loan

He said that the government had also approved procedural and tax relaxations on the import of textile machinery to upgrade industry and to enhance its capacities. The official said that through this package cost of doing business would come down in the country.


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