Mansoor Sadiq

Representatives of export-oriented industries have expressed concern over the withdrawal of gas subsidy, and said the government should restore the subsidy as industrial units are finding it difficult to survive amid increased production costs. Senior Vice Chairman Pakistan Yarn Merchants Association Sohail Nisar said while talking to WealthPK that following the import restrictions, the industrial sector of the country was surviving with the assistance of subsidy packages, but the government earlier abolished subsidy on electricity tariff and now the Oil and Gas Regulatory Authority (OGRA) has announced to withdraw gas subsidy for five export-oriented industries, which will add to the difficulties of textile sector.

Sohail said that since the closure of the electricity tariff on textile sector last month, millions of power looms across the country have not been made operational, adding that with the removal of gas subsidy, production cost of textile sector will increase manifold and result in the closure of industries and increased joblessness. The government has withdrawn a Rs80 billion subsidy on gas to five leading export-oriented industries, including textile, sports, surgical, leather and jute sectors.

The federal government ended the series of concessions on the continuous demand of the International Monetary Fund (IMF) and other sectors. This decision was also endorsed by the National Electric Power Regulatory Authority (NEPRA) in March 2023. The NEPRA approved the federal government’s decision to withdraw concessional tariffs of five export-oriented sectors and agriculture tube wells from March 1, 2023.

The OGRA has announced that the rates approved by it will be implemented in all export sectors from May 1, 2023, and the export-oriented sectors will have to pay an additional $4 per mmbtu on RLNG (re-gasified liquefied natural gas). OGRA said that for the export sector, gas will now cost $13 per unit. According to the All Pakistan Textile Mills Association (APTMA), all leading textile units are feared to be closed due to the end of subsidy on gas. As part of Pakistan's efforts to fulfil the conditions of IMF, there has been a record inflation in the country.

Tariq Yousuf, Senior representative of Karachi Chamber of Commerce and Industries (KCCI), said the government has been constantly convincing the exporters to bring dollars into the country, but the withdrawal of subsidies will only make matters worse. He pointed out that the government has abruptly withdrawn gas subsidy despite commitment to continue it till June 30, 2023, for zero-rated sectors whose manufacturing cost has gone up badly. He said a similar move was taken earlier by withdrawing regionally competitive energy tariff (RCET), which raised the electricity cost by almost 80%, making it impossible for industries to bear the burden. Keeping in view the overall situation, Tariq Yusuf demanded the government restore the subsidy package for natural gas, RLNG and electricity to increase the efficiency of industries for enhancing exports.

Credit: Independent News Pakistan-WealthPk