Disconnection of gas supply

Disconnection of gas supply to as many as 100 export-oriented textile units in Warburton and Manga areas at a time when the country's trade deficit is touching $16 billion will further erode the economic viability of the textile sector, says a Recorder Report quoting Aptma member Akbar Sheikh.
According to him, textile mills will have to pay millions of rupees as maximum indicator charges to Wapda for using electricity even for a single day in the month. And the extra cost accruing to the mills during three months may be as high as Rs 10 million per mill.
He has said that reduced gas pressure without prior notice to the mills is another cause of additional cost to the industry, as this leads to gas-based electric generators to trip, which damages not only the generators but also the expensive textile machinery.
Akbar Sheikh has proposed that the government should ensure top priority to textile industry in gas supply schedule. He has also suggested that instead of shutting down the entire industrial zone, which overloads the electricity grid, a schedule of loadshedding for industrial units should be worked out, as was done last year.
Further, a hotline should be established between the distribution company and the gas-based industrial units to give them prior notice before pressure in the line is reduced. He has also demanded financial compensation to textile units to cover the loss caused by disruption in gas supply. Most of the demands made by Akbar Sheikh are quite legitimate.
The government should order immediate restoration of full gas supply to the affected industrial units, as the sector accounts for as much as 67 percent of Pakistan's total exports, and contributes 11 percent to its GDP. Further, the sector represents 31 percent of the total manufacturing investment in the country, which reflects its pivotal position in the national economy.
With its cost competitiveness vis-à-vis fuel oil, natural gas has come to play a central role in the country's industrial sector as most of the industries which were previously using fuel oil have switched over to gas. It has become a major input in cement, power and fertiliser sectors.
However, the growing crunch in gas availability due largely to depleting gas reserves and no fresh gas discoveries, has created a crisis-like situation. The available data shows that the total production of natural gas in 1985-86 was 10.711 million cubic meters, with Sui and Mari gasfields contributing 67 percent and 20 percent respectively.
Interestingly, it was estimated in 1970 that Pakistan's natural gas reserves would last about a hundred years. But due to our failure in developing new production facilities, coupled with increased gas consumption rates in different sectors of the economy, there has been a sharp depletion of gas reserves. It is now feared that the existing gas reserves in the country may not last much beyond the first decade of the 21st century.
Meanwhile, a major trade policy concern of Pakistan is to augment its share of manufactured exports in world trade, which calls for the strengthening of competitiveness of our exports. As trade and industrial sectors are undergoing rapid transformation in compliance with WTO guidelines, there is an urgent need for Pakistan to improve the quality of its textiles.
This calls not only for evolving better seed varieties for obtaining enhanced cotton production, but also modernisation and diversification of textile infrastructure. Investments made in this sector can yield rich dividends as cotton and its value-added industries, including garment industry, contributes 67 percent to Pakistan's annual export income.
The government has indeed taken some initiatives to provide an enabling environment to the sector. But establishing a separate Ministry of Textiles and the proposed Textile Cities in Karachi, Faisalabad and Lahore would mean little if the existing industrial units such as those in Warburton and Manga areas remain deprived of such basic raw material as gas for long periods of time.
In fact, frequent gas supply interruptions, unscheduled shutdowns and low gas pressure have been some of the most common complaints in Karachi's industrial estates, as elsewhere in the country.
Akbar Sheikh has made some very useful suggestions such as establishment of a hotline to provide prior information to the industrial units regarding the impending low pressure, to avoid any damage to the generators or the machinery. Secondly, his proposal to evolve a definitive schedule for gas supply shutdowns, if any, needs to be implemented.
Thirdly, the government should hold talks with textile industry representatives to find ways and means of reducing the maximum demand indicator charges, so as to avoid further erosion of the textile sector's competitiveness.
Fourthly, the issue of cross-subsidy or diversion of gas to domestic consumers should be resolved through talks at the earliest. And lastly, full gas supply to the Warburton and Manga textile units should be restored immediately to avoid cancellation of any export orders.