Ahmed Khan Malik 

The industrialists in Balochistan criticised the government's decision to raise the gas tariff for captive power plants (CPPs), which they said would have a crippling impact on the already struggling industries in the province.

The government increased the gas tariff for captive power plants from Rs3,000mmBtu (metric million British thermal unit) to Rs3,500mmBtu. The industrialists said that the industry was already bearing the brunt of high costs of inputs and borrowing due to elevated interest rate.

Mustafa Buledi, a textile industrialist in Uthal Industrial Estate of Lasbela district, told WealthPK that the gas price hike would be disastrous for the export-oriented textile industry, which accounts for 60% of the country’s exports.

He noted that the recent increase in the gas tariff by 16.7% was the last nail in the coffin of the export-oriented textile industry, which was already facing numerous challenges in the domestic as well as international markets. He said that the textile sector, the backbone of the country’s exports, was not only earning the much-needed foreign exchange for the country but also providing employment to millions of people directly or indirectly. 

Buledi said that due to an astronomical increase of 311% in gas tariff during the last two years, the export-oriented textile industry is becoming uncompetitive in the international market as the energy costs account for a large share in the production costs of textile goods. “With the highest energy costs in the region coupled with the highest cost of borrowing and taxation, Pakistani textiles will be rendered uncompetitive in the international market.

The recent decision to increase the gas tariff for CPPs will not only prove to be detrimental in achieving the target set by the prime minister for export growth in the ‘Uraan Pakistan’ programme but the country would also loose the hard-earned export market.” 

Naveed Raza, a textile industrialist in the Hub Industrial Estate, said that the industry has invested billions of rupees in gas-based power generation plants to ensure uninterrupted electric supply for their own consumption as the power utilities in Balochistan do not have the capacity and capability to provide required load to the industry.

He further said that the government was trying to encourage the use of grid electricity instead of electricity produced by gas-based CPPs without realising that this policy is not implementable in Balochistan due to poor capacity and inconsistency in the supply of grid electricity. 

Raza noted that the government has increased the gas tariff of CPPs only, and all other sectors, including fertilizer, processing and domestic, have been left untouched. “This targeted discrimination is not acceptable and hence rejected.” He demanded the federal government reverse its decision of unprecedented increase in the gas tariff to make textile exports competitive in the international market.

Credit: INP-WealthPk