Aptma rejects gas price hike for export-oriented units

LAHORE: The All Pakistan Textile Mills Association (Aptma) has rejected the sudden hike in gas prices from $6.5/mmbtu to $9/mmbtu for the export-oriented units.

Addressing a hurriedly-called press conference at the Aptma House, association chairman Abdul Rahim Nasir said that this upward revision in gas tariff is in contradiction of the commitment given by the federal government for continuous supply of gas and regasified liquefied natural gas at $6.5/mmbtu.

Nasir said that the regionally competitive energy tariff provided by the present government over the last three years has yielded outstanding results. The industry has delivered to the nation by investing Rs450 billion in machinery for capacity enhancement as per the commitment.

This has resulted in an increase of $500 million in exports every month in FY22. But the new projected investment of $5 billion, setting up of 100 new plants and addition of at least 500,000 new jobs with 90 per cent of them in Punjab would all be jeopardised, he said.

The textile industry’s commitment to increase exports by $7.5 billion by the end of the fiscal year 2021/22 over the fiscal year 2017/18 has become a reality., he said, adding that the government’s visionary, progressive, and pro-export policies have enabled unprecedented textile exports growth. The textile exports have increased 27 per cent in the first four months of the current fiscal year.

A comparison of gas tariff in the region with Pakistan in a study conducted by the Pakistan Institute of Development Economics (PIDE) suggests that gas to the export-oriented sector is available at $4.05/mmbtu in Bangladesh and $5.19/mmbtu in India.

In the textile sector, Nasir said that the component of energy costs accounts for around 18 per cent of the final product value. “An increase of $2.5/mmbtu would result in around a 5 per cent hike in the final cost,” he added.

Aptma Northern Zone chairman Hamid Zaman emphasised that the textile industry operates on a very slim margin of 3 per cent to 4 per cent and the present increase in gas tariff only for the Punjab industry would render it uncompetitive and unserviceable not only globally but also in the local market. It will lead to large-scale closures and resultantly unemployment, Zaman warned.

The tariff increase only for the Punjab industries is also against the principle of promissory estoppel, which protects previous agreements and contracts.

Aptma Northern Zone senior vice chairman Karman Arshad said that more than double the gas price difference between Punjab and Sindh would promote parochialism and damage national harmony.

Punjab is being rapped and penalised through abnormal increase in the gas tariff, rendering it competing against other provinces, he said, adding that a wide gulf between the gas prices of Punjab and the rest of the country would lead to national disharmony and jeopardise the sustainability of the textile business in Punjab.

“If the regionally competitive rates are not revived again, we would be left with no other choice but to shut down the industry,” he said.

“The new gas tariff of $9/mmbtu is not acceptable at all. We urge Prime Minister Imran Khan to reverse this new decision of gas tariff hike, otherwise it would be a decisive blow to the industry,” Arshad told BOL News.

Aptma secretary general Raza Baqir was also present on the occasion.