Enhanced exports: the only solution — II

Building the economy necessitates identifying gaps, devising effective policies and working towards consistent improvement despite daunting challenges. The textile industry has invested $5 billion in new plants, machinery & equipment, and more capacity is being added, the results of which can be seen in increased production and exports, but all of this is now risked due to energy concerns. This appears to be a repetition of the past as, whenever the textile sector begins to grow, irrational policy changes destroy the upward momentum. To support the sector’s development going forward, the government must ensure uninterrupted and regionally competitive gas and electricity supply to the entire value chain to enable the sector to keep on marching towards success.

This raises questions on power supply reliability as the alternative source of energy in addition to the countless pending cases of extension of load and new connections. Most mills at present cannot fulfill the energy needs for power or gas as each connection in itself is insufficient to function optimally.

Furthermore, as modern textile machinery involves sensitive equipment, it requires consistent standard power supply without interruptions or variations. Unwarranted interruptions, inordinate breakdowns, fluctuating voltage and flicker are resulting in huge financial and performance losses, and consequently lower exports. Sample details of shutdown, unstable voltage, tripping, jerks and mainline failure from 1st January to 6th February on actual grids is give in table below.

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Grid Performance Report 01/01/2022 to 06/02/2022
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Period                     Planned     Low/High
                         shutdowns      Voltage      Trippings      Jerks       Mainline
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                                                                                 Failure
Jan 1-5, 2022               8             34             70           69              40
Jar 6-9, 2022               9             27             29           40              23
Jan 10-23, 2022             4             76             58          106              16
Jan 24-31, 2022             5             49             22           48               9
Feb 1-6, 2022               4             24             23           47               5
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Each stoppage/jerk leads to the halting of machinery from 30 minutes to 2 hours. This loss is in addition to the in-process material that is lost. As a result, the output of textiles is therefore hovering at less than 75% of installed capacity. While it may appear that shutdowns, breakdowns and tripping can be somewhat mitigated, in reality the issue of non-standard supply requires concerted technical corrections which can only be carried out at the Discos level through changes in perception.

Previously, Nepra allowed the power supply to B3 consumers, which include the majority of the textile sector, to be increased from 5MW to 7.5MW. However, all B3 consumers are subsequently being charged for grid sharing, including transmission line charges, as well as the full cost of land for enhanced full sanctioned load whereas the incremental load is only above 5MW, even though it is logical to place this requirement on incremental loads above 5MW.

Enhanced exports: the only solution—I

The loads up to 5MW are already approved, processed, and paid for. Sunk costs cannot be redeemed or recovered, nor can investments that have already been made and correctly accounted for in records/yearly balance sheets. Nonetheless, demand notifications have been issued to the sector for the whole load, including existing sanctioned load/capacity, which is obviously not commercially viable and tantamount to denying load extension. This runs counter to the governments stated objective of maximizing electricity usage.

Apart from issues in energy, the lack of investment in the cotton sector presents further impediments to economic growth:

• Cotton seed which is unproven, substandard and not resistant to pests and diseases (old generation BT cotton)

• Seed supply chain completely destroyed needs to be restructured for the supply of quality seed

• Lack of the International Transgenic technology through proper channel.

• Cotton Seed Variety approval system is very slow and it takes years to make a variety commercially available to the cotton farmers. Private R&D seed companies are ignored in the approval process

• Plant Breeder rights have been formulated but not implemented to confirm stewardships of the variety

• The currently available pesticides have failed to yield results on the major cotton pest, i.e., Whitefly, contrary to the claims made by various companies

• One major reason of the cotton crop diminishing is sugarcane cropping up in the best cotton sowing area.

Measures to improve the country’s exports necessitate a greater focus on cotton sector improvements. Future policies must be geared towards an improved, genetically modified and certified seed system, an efficient variety approval system, support for private sector R&D organizations, linkages with research bodies (public, private, local, international), seed companies and other stakeholders, innovative technology using advanced mechanization, targeted input and production subsidy to farmers, and lastly the implementation of the Pakistan Cotton Control Act and the Cotton Standardization Act 2009 to improve the quality of cotton.

(Concluded)

Copyright Business Recorder, 2022