Page 18 - TEXtalks. November- December 2023

18

Gas run generator costs exceed

grid power rates as textile mills

continue to close down

Pakistan’s textile industry, a key export sector, faces dependable energy source.”
insurmountable challenges from high energy costs
and a weakening currency, becoming less Although the government provided the textile
competitive in the global market. Following a surge industry with subsidized RLNG at $9.0 per mmBtu,
in Gas rates from December 1, the gas tariff is this rate was above the regional average for
poised to jump, maybe as high as $13 plus per unit, countries such as India, Bangladesh, and Vietnam.
in ensuing months in line with RLNG rates This single point reduced the competitiveness of the
announced by the regulator. country’s exports. Furthermore, with the withdrawal
of the regionally competitive tariff and the imposition
The rising cost of gas made the local textile industry of a fixed power tariff of Rs20/kWh earlier and now
uncompetitive in international trade, and the withdrawing it, the electricity cost from the national
grid has also doubled.
unwelcoming development has also put the
export-oriented industry in a catch-22 situation as The catastrophic consequences of high energy
captive power cost exceeds grid-power rates. costs have forced many mill owners to close down
their businesses. Late last year, the All Pakistan
According to analysts, most of the generation cost Textile Mills Association (APTMA) reported that over
of captive power plants with such a high gas tariff 1,500 textile units have been forced to shut down
has surpassed Rs45 per unit, more than the utility due to the rising power and gas tariff.
tariff for industry nowadays. In this challenging
development, only efficient plants, with up to Rs38 One of the most critical aspects of this connection
per unit electricity cost, could produce electricity has been the disruption in electricity and gas
with a high RLNG tariff. Only about one-fifth of the supplies. The composite sector mainly depends on
industry installed efficient plants in recent years in an uninterrupted supply of electricity and gas.
the Punjab province. Interruptions in energy supply and curtailment of gas
supply or low pressure seriously hurt the efficiency
“If you cannot produce in-house electricity due to of the textile unit.
high cost of generation, you would also be exposed
to infrequent grid power, rendering the It is pertinent to mention that natural gas remains the
manufacturing process less efficient,” according to primary or only energy source for 75% of the textile
an industry official. industry, which consumes only around 8% of the
national gas supply. Therefore, any disconnection of
“The next few months for the textile industry would gas or its unbearable cost severely affects the local
be tough to ensure a competitive and textile industry and export orders.

November/December 2023