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Renewable Energy Keeping Pakistan Denim Factories Afloat

There are two words that Sarfraz Cheema dreads hearing more than anything right now: load shedding.

As Pakistan hunkers down amid a deepening power crisis, parts of the country are experiencing up to 10 to 18 hours of load shedding at a time. When that happens, the lights go out, the looms stop whirring and the sewing machines fall silent.

“The cuts are good enough to deteriorate a full day’s production,” Cheema, head of sustainability at Soorty, told Sourcing Journal. “We are a big name in the textile sector and bear the capability to sustain for a while. However, if the condition persists with no win-win solution, we could be endangered.”

The global energy crush has weighed heavily on Pakistan, which lacks the financial muscle to outbid European nations seeking alternatives to shunned Russian supplies. Bloomberg reported last week that state-owned Pakistan LNG failed to complete a purchase tender for July shipments of liquefied natural gas for the third time this month due to its spiraling cost.

A dearth of fuel could worsen energy shortages as the Indian subcontinent plunges into one of the hottest summers in a century, causing surging demand for fans and air-conditioning. The government has employed a slew of energy-conservation methods, including rolling blackouts, reduced hours for public servants and early mall, office and warehouse closings from Karachi to Lahore.

Further restrictions could threaten Pakistan’s textile and garment industry, which accounted for more than 60 percent of the country’s total exports in the 2021 fiscal year. They could also challenge the country’s growing denim sector, which dispatched $275.9 million worth of jeans to the United States between January to September last year, a 63.4 percent year-over-year increase that saw it outlap China’s for the first time.

“Should the power cuts persist, there could be a decline of more than 20 percent in exports,” Sheikh Luqman Amin, senior vice president of the Pakistan Readymade Garments Manufacturers and Exporters Association, an industry trade group, told AFP earlier this month.

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Add to that the rising expense of raw materials and the cost of production has “skyrocketed,” Cheema said. “The biggest question mark is how to bridge up our internal inflation with a speedy and ambitious international market at the prevailing cost of production.”

Power shortages ‘not new challenges’

The bright spot in a gloomy situation is sometimes literally so.

In May, Soorty announced it was establishing a 6.26-megawatt (MW) captive solar project and a reflex energy storage solar hybrid controller capable of generating 9,198 megawatt-hours every year. Soorty also sponsors Nasda Green Energy Ltd., a wind farm that produces 50 MW of renewable energy for the national grid.

“Cleaner energy is the talk of the town for farsighted and smart investors,” Cheema said. “The way the cost of energy is rocketing, cleaner energy…is the future for Pakistan to cope with the energy crises.”

For years, Artistic Milliners has worked to wean itself off the national grid, which has proven inefficient even when power is crackling. In 2018, the vertically integrated denim manufacturer launched Artistic Energy, a wholly-owned subsidiary whose solar and wind investments, including a new 8.5 MW project with Reon Energy, are now “bearing fruit,” ​​Gibran Khaliq, the company’s marketing lead, told Sourcing Journal. By the end of the year, Artistic Milliners hopes to generate more than 50 MW of solar power in addition to the 100 MW of wind it already creates.

“Industries in Pakistan are resilient and we’re already prepared to meet global crises, particularly in terms of supply chain and fuel challenges. This makes the textile industry in particular fairly shock-adaptive,” Khaliq said. “Power shortfalls are not new challenges, and that is why Artistic Milliners have had our infrastructure in place for decades, only strengthening with time, investment and technology.”

Last year, then-Prime Minister Imran Khan promised that the country would produce 60 percent of its electrical power from renewable sources by 2030. “Renewable energy is not just vital for us anymore, it is fiscally prudent,” said Khaliq, noting that Artistic Milliners is a member of the Net Zero Pakistan initiative.

“What needs to happen is an even greater acceleration towards greener power, supported through public-private partnerships to address our position as one of the world’s top 10 most climate-vulnerable countries,” he added. “Current global challenges and their resultant impact on fossil fuel prices have only served to underscore that.”

For Farheen Zahoor, head of CSR and sustainability strategy at AGI Denim, previous energy investments, including solar and wind, have also been the manufacturer’s saving grace. Her concern now is less about power continuity and more about a U.S. and European recession that could shrink consumer confidence and throttle purchase orders.

“Reduced demand means production downtimes,” she said. “Low demands from customers will negatively impact industry growth and overall country’s growth.”

Another worry? Soaring logistics costs. Even the additional 24 percent bump in labor costs due to a recent 40-percent minimum wage hike in Sindh province in order to keep pace with inflation doesn’t compare.

“Due to an increase in oil prices, carriers have reduced their flights resulting in limited space, higher costs and late deliveries,” Zahoor said.