Punjab devastated by energy crisis

As the adverse effects of energy crisis have started appearing on the overall business horizons of Pakistan, Punjab seems to be the most severely hit region as compared to Sindh and KPK. Textile industry is on the course of total disaster as production and exports are falling month by month due to persistent gas closure and electricity load shedding in Punjab.
In this state of uncertainty and frustration, all fresh investments and new projects in the textile sector have come to a standstill as energy crisis and economic slowdown hurt businesses as well as domestic and export markets. It is pertinent to cite the case of recent International textile exhibition held in Frankfurt, Germany. Around 219 Pakistani companies exhibited their products but the Pakistani exporters were able to get very little business amounting $ 3 millions only as compared to $100 million in the past. The poor performance is being attributed to Pakistani exporter’s inability to meet the last year’s shipment deadlines that lapsed due to delay in production process caused by energy crisis.
Suspension of gas supply for a long period of time, rising cost of production, hyper inflation, high mark up rates, institutional corruption, political instability and economic slowdown have caused the closure of industrial units, rendering thousands of workers jobless. In Faisalabad alone, more than 500 textile units and around 26 flagship companies have closed their business after suffering heavy losses. A number of mega industrial groups have shifted their capital outside Pakistan to open industrial units in countries like Bangladesh and Malaysia. The industry in Punjab has remained totally closed for the last 35 days as the gas authorities had forced indefinite shutdown. This lengthy gas cut off had followed irregular load shedding in earlier months which have resulted in decline of textile exports by 159.5 million dollars in October and 193.9 million dollars in November topping at 225 million dollars in December of last year. The shortfall was visible more prominently in sub sectors. Export of cotton cloth went down by 44.8 million square meters which is down by 26.41 per cent, Knitwear 4.59 million dozens short which is 37.65 per cent, Bed wear 8342 metric ton 32.75 per cent, Towels 904 metric ton 7.83 per cent and garments 0.19 million dozens which is 6.75 per cent in December.
Textile sector is the backbone of the national economy as it has direct contribution to domestic production and foreign exchange earnings. Gas shortages in conjunction with electricity load shedding created immense problems for the industries and negatively impacted the production process as well and export of value added textiles. Textile industry lost 225 million dollars exports in December and likely to lose another 250 million dollars in January. About 600 million dollar shortfall in three consecutive months is a big setback to the national economy and it is apprehended that if the situation remains constant, this shortfall could touch one billion dollar mark in February. Unprecedented energy shortage was the prime reason behind substantial drop in exports. Situation arising out of gas outage would lead to further decline in exports, huge labor layoffs and decrease in the revenue of the Government. It is predicted that negative growth in the textile exports would adversely affect the country’s economic growth.
Industry sources say that Government must set priorities for uninterrupted gas supply to industries to resolve energy shortage issue. Huge gas reserves have been explored and waiting for execution. The Government, therefore, should execute these projects on priority basis to bridge the rising gap between demand and supply of gas. Billions of dollars investment on machinery is becoming redundant owing to long hours load shedding of electricity and no gas supply.
Energy supply and economic growth were interlinked and gas suspension had slowed down the pace of industrial growth in the country. Present trade and industrial conditions in Pakistan are the worst in the history of the country and if timely remedial measures are not taken, the situation will get out of control.
The trade bodies like PTEA and APTMA have repeatedly urged the government to speed up its efforts to overcome gas crisis. Pakistan’s exports mostly depend on textile and due to outage of gas supply; country’s export will not grow as targeted and the gap is likely to widen up in the coming months. It is high time that the government wake up and ensure supply of gas to industries to avoid troubles in the production process.