Via an online meeting with representatives of textile and value-added sectors, Adviser to Prime Minister on Commerce and Investment Abdul Razak Dawood assured that their problems would be raised with PM Khan and the federal cabinet. During the meeting, the advisor said that the government would try to resolve the problems that the textile industry has been facing.
Associations representing the textile industry asked Mr. Dawood to abolish all taxes and duties using the presidential ordinance and permit duty-free import of cotton yarn which is the primary raw material value-added textile industry.
The attendees also requested the government to put a ban on export of cotton yarn of 30 single or below count till June 2021 to guarantee availability of standard yarn to the export sector so that the orders are completed without any inconvenience. The government should allow the import of cotton yarn from India via Wagah Border as there is a dearth of quality yarn in Pakistan and the prices are soaring, they added.
The participants of the meeting included the Chairman of the Council of All Pakistan Textile Associations Zubair Motiwala, Chairman of the Pakistan Apparel Forum Muhammad Jawed Bilwani, Central Chairman of the Pakistan Hosiery and Manufacturers Exporters Association (PHMA) Riaz Ahmed, PHMA Chairman (South Zone) Tariq Munir, Senior Vice Chairman of the PHMA (North Zone) Farukh Iqbal) as well as businessmen Ijaz Khokhar, Haroon Shamsi and Zia Alamdar.
Similarly, anti-dumping duties on goods imported for re-export by export-oriented units and manufacturing bond should also be terminated, said the participants. The industry representatives also asked for a freeze in the special tariffs of 7.5 cents for electricity and $6.5 for gas for the next three years at the minimum. They also called upon the government to provide the sector with uninterrupted electricity and gas for meeting export orders.
The Prime Minister’s plans for industrialization, creating trade surplus, creation of employment opportunities and earning foreign exchange can only be made possible when cotton yarn and uninterrupted supply of utilities is ensured on special-tariffs.
The sector also voiced their concern on the recent announcement by the present government regarding the discontinuation of gas to captive power plants (CPPs)
Moratorium on gas supply poses threat to textile sector
Pakistan’s textile sector, which makes up around 60% of the country’s exports is seeing a loss in terms of international buyers and their orders. This loss is reportedly due to the growing competition in the region as well as the Cabinet Committee on Energy’s (CCoE) directive to cut gas supply for power production in captive power plants (CPPs) to ensure the domestic consumer gets the maximum gas supply.
The textile industry has an option to use the electricity from the national grid system because Pakistan’s potential for power production is in surplus despite it being short on gas. However, there is a certain reluctance attached to this due to an untrustworthy power distribution system.
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“The CCOE’s (Cabinet Committee on Energy) decision of moratorium on gas/RLNG supply to captive power plants (CPPs) of the export-oriented sector will result in massively regressing the export sector outlook and put a break to any future expansion or investment,” expressed the All-Pakistan Textile Mills Association (Aptma).
It further stated that the captive power plants (CPPs) used by the textile industry for power production via gas-fired power generators are 85% less expensive than power from the national grid station. CPPs power production costs seven cents per unit (kWh), in contrast to the national grid where it costs 13 cents per unit.
Therefore, the experts believe that the government should reevaluate its decision of discontinuing fresh gas supply to CPPs as its use is economic and not consumptive which in turn results in employment generation and enhanced exports. Moreover, CPPs are not exactly inefficient when compared to bulk power generation as the efficiency of the IPPs (Engro Power, Orient Power, Saif Power, Sapphire Power, Foundation Power, Halmore Power) is 50% at generation level but once the line losses and commercial inefficiencies of the DISCOs are considered, effectiveness at the point of consumption is merely 42%. There are also a variety of benefits of utilizing gas in captive including reliability, high efficiency, no theft, no financial subsidies and no drainage of foreign reserves.