Gas uncertainty for textile sector

Even 100 percent electricity does not satisfy Punjabs textile sector. Thinking that better electricity supply for the sector would assuage the industrys concerns, the Prime Ministers ad hoc decision for a zero loadshedding policy for Punjabs industry is proving contentious.
And why would it; while the availability of electricity is crucial for the industry, more significant is the cost at which it is attained. Textile sectors demand for improved gas supply has made the governments decision to exempt industry from loadshedding completely irrelevant.
In a recent conversation with BR Research, Chairman APTMA disclosed that gas shortage is rendering exports uncompetitive, and a further squeeze would completely shut down Punjabs industry. Without undermining the importance of gas in the domestic and fertiliser sector, it is important to emphasize the significance of gas over direct electricity to the textile sector of Punjab that has around 70 percent share in the countrys textile industry.
The factors that go in favour of diverting gas to the textile sector include the huge foreign exchange it earns, the number of people it employs and
its eight percent share in GDP.
While the unit cost of grid electricity and gas is the same across the provinces, a restricted supply in Punjab (30 percent compared to 100 percent in Sindh and KPK) creates a cost differential for the province, making its exports expensive. With the overall cost differential for Punjabs industry to jump to Rs150 billion annually under the same conditions of restricted gas supply; one can imagine the differential loss on the complete termination for four months.
Its a catch-22 situation for the government. It would not want to ignore the domestic sector especially at a time when the political situation sits on a rocky platform.
But if it pays no heeds to the hue and cry of the textile sector, it would be hurting another big chunk of its supporters. There are a number of ways the government could have handled it, had it not prolonged the issue when the winter season is just about to pick pace.
Options like solar geysers and heaters for the domestic sector should have been tabled and rolled out much earlier.
However, now it is a game of nerves for the government where ideally confusion over gas load management and differences of opinions in the cabinet must be resolved rationally. And yes, that includes plans for prioritizing imported LNG that will hopefully be added to the stream soon.

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INTER PROVINCE ENERGY COST DIFFERENTIAL

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                                                  Unit     Punjab     Sindh

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Gas Based CPPs Capacity - Total Industry            MW       3000      3000

Gas Based CPPs Capacity - Textile Industry          MW       1500      1500

Electricity from Gas                           Rs./KWh       6.75      6.75

Electricity from Grid                          Rs./KWh      14.81     14.81

Gas Supply available                         % of load        30%      100%

Avg. energy cost                               Rs./KWh      12.31      6.75

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