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Pakistan Government May Not Supply Gas to Textile Industry

Pakistan’s ongoing energy shortage has already hampered textile mills with gas being diverted from factories in favor of power plants, and now uncertainty over the gas supply could prolong the problem. Gas cutbacks have already caused up to 10-hour shutdowns and plunging production.

The government made a “soft promise” last month to provide enough gas during the winter months to keep factories operating at least at one third of production capacity, but now it is unsure whether it will keep that promise.

At a meeting in Islamabad Tuesday, Pakistan’s Petroleum and Natural Resources minister Shahid Khaqan Abbasi, Water and Power minister Khawaja Muhammad Asif, Finance minister Ishaq Dar and Textile minister Abbas Afridi, discussed how to allocate the limited resources, and ended in a stalemate.

According to Pakistan’s The News, the Petroleum and Natural Resources minister strongly opposed exempting the textile industry from gas loadshedding as there isn’t even enough gas to accommodate domestic demand, which will only increase as the weather gets colder.

The power minister also reportedly opposed giving gas to textile facilities at the cost of providing it to power plants.

Representatives from the All Pakistan Textile Mills Association (APTMA) told the finance minister that the continued gas supply is necessary for the value addition processes that are part of textile production like spinning, for example.

In Pakistan, the industrial sector can only use gas as fuel for nine months of the year, and must switch to alternative fuels during the three months of winter. But now that the EU has afforded Pakistan duty free access to its market under Generalized Scheme of Preferences, or GSP Plus, textile industry stakeholders have said halted gas supply would not allow the sector to exploit the potential to increase exports to the E.U.

For the July to September 2014 period, Pakistan’s textile exports dipped 4 percent to $3.4 billion, according to the Pakistan Bureau of Statistics. The country has lost at least $1 billion so far this year as a result of the energy shortage, and industry stakeholders fear a complete shutdown during winter could lead to an additional $2 billion loss.

As the issue remains that there is simply not enough gas to go around, the finance minister invited APTMA to offer its own solutions. The matter will be discussed further at the committees next meeting, a date which has not yet been disclosed, but the finance minister asked relevant authorities to maintain the current gas supply to textile units until an agreement is reached.