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Pakistan: Government Promises to Supply Gas to Factories After Reports of Declining Exports

Pakistan’s persistent energy crisis has weighed on its textile sector, and the country saw a sizeable dip in exports in the first quarter of its current fiscal year. But the 4 percent plunge may have been what the industry needed to get the government’s attention.

According to Pakistan’s The Express Tribune, the country’s government made a “soft promise” Tuesday to provide gas during winter to keep factories operating at least at one third of their production capacity.

Because of Pakistan’s energy shortage, gas has been diverted from textile mills to captive power plants resulting in up to 10-hour shutdowns at the mills.

At a meeting with industry representatives, Pakistan’s Finance Minister Ishaq Dar said the government would provide 100 million cubic feet of gas to the textile industry per day, or enough to ensure the factories are run at least six hours a day during winters, The Express Tribune reported. And according to Textile Minister Abbas Afridi, “It is the Ministry of Petroleum and Natural Resources’ concern where it diverts the gas from to keep the factories running during winters.”

Textile exports for the July to September 2014 period dipped 4 percent to $3.4 billion, according to figures released Tuesday by the Pakistan Bureau of Statistics. Exports of carded cotton saw the biggest drop, down 63 percent for the period. Raw cotton exports declined 24 percent, with cotton yarn down 21.8% and cotton cloth 13.5% lower than the corresponding period last year.

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The country’s textile industry has lost $1 billion in the last six months as a result of the energy shortage, suffering the loss despite the duty free access to the European market after the E.U.-granted GSP Plus status took effect at the start of this year.

Chairman of All Pakistan Textile Mills Association SM Tanveer said, “We have not yet started yielding results of the GSP Plus due to deepening energy crisis,” The Express Tribune reported.

Both the GSP Plus status with the E.U. and the country’s new textile policy geared at stimulating growth in the industry and providing incentives for the value-added sector, was expected to help Pakistan double its exports to $26 billion over the next five years to 2019, a number double that of its current $13 billion in total exports.

The $1 billion loss in exports could only be the beginning of a dismal fiscal year for Pakistan’s textile industry if the gas supply issue isn’t at least somewhat resolved for the remainder of the year.

Pakistan Textile Exporters Association chairman Sohail Pasha, said, “Our fear is that if the industry is completely shut down in winter there will be an additional loss of $2 billion.”