Due to an acute gas shortage, the textile export sector is once again in trouble as the government has decided to cut off gas supplies for power production to their individual units. Due to this new dilemma, international buyers are backing out and the orders are now going to the regional competitors. The textile sector brings in a total of 60% earnings through export.
If this shortage of gas supply problem is not solved, this will definitely bring down that number.
However, a middle solution was offered by the government which was to get electricity from the national grid system but there’s also a flaw in this alternative. The production from captive power plants costs seven cents per unit (kWh) compared to 13 cents from the national grid.
Accordingly, the supplies from the grid stand over 85% expensive than CPP.
“(Textile) exporters have started receiving emails from international buyers for cancellation of their buying orders (in the wake of the disconnection of gas supplies),” Pakistan Apparel Forum (APF) Chairman Jawed Bilwani said in a brief statement.
“The previous decision of CCOE to reduce the price of power to 7.
5 cents to encourage mills to shift to the grid was not implemented, and the decision to impose a gas supply moratorium for captive power of EOUs (export-oriented units) will result in an increase of over 10% in the costs of export orders,” All Pakistan Textile Mills Association (Aptma) said in a statement.
“The government should withdraw the gas for captive power plants in a phased manner and not abruptly,” Pak-Kuwait Investment Company (PKIC) Head of Research Samiullah Tariq said on his Twitter handle while analyzing the changing situations.
Aptma said, “Mills have started receiving calls from banks to verify how they will fulfill the (international buyers) orders based on gas/RLNG supply and payback of refinance facilities is being demanded. New financing facilities for investment and refinance have been abruptly put on hold by the financing institutions.”
