Faisalabad, a city known as Pakistan’s Textile Valley due to its once flourishing textile industry has recently transformed into a city under siege of protestors demanding the restoration of gas supplies. The product range of manufacturing units has been reduced into strikes, rallies, protests, lock outs and termination of labour resulting in unemployment. Textile exporters, industrialists and labour rights campaigners have got together to urge the government to immediately stop discrimination in gas supply to upcountry industries, as four days a week suspension of gas supply has forced closure of industrial units, rendering thousands of workers unemployed.
Over the recent months, the export of cotton yarn has declined 26 per cent while the export of cotton cloth is showing steep decline of 32 per cent. Similarly knitwear export has come down by 26 per cent and of bed wears 28 per cent. Export of towels is down by 12 per cent and of readymade garments by 14 per cent in the month of November alone. The business community has a strong resentment that instead of remedying the situation, textile industry is being pushed to the wall. Calculating the four days weekly gas load shedding, it is estimated that the industry would remain shut for 120 days out of 365 days of the year; manufacturing would be reduced and industrial output would be down by 33 per cent; millions of daily wagers would be out of job and the exports of the country would further decline, he apprehended. The alarming figures are reflecting the untold stories of an unprecedented industrial crisis leading to collapse of the business activity, widespread unemployment leading to crimes.
Workers and entrepreneurs usually represent two different camps and are mostly pitched against each other due to their obvious clash of interests. But now they have realised that the survival of one is linked to the prosperity of the other. A 45-year-old factory worker, Ghulam Muhammad, a resident of a shanty town, was down with flu. He was advised a complete bed rest for three days. He ignored the doctor’s caution and came out along with his fellow workers to protest against the cruel four-day gas load shedding schedule for industry.
This is a back stage of ongoing large-scale protests held throughout the length and breadth of the Manchester of Pakistan that is fast turning into Somalia’s Capital Mogadishu or any African city where starvation and crimes go hand in hand. Thousands of industrial workers have lost their jobs due to gas and electricity crisis. The city of more than 10 million people, famous for its flourishing textile industry, has been significantly declining in terms of export and business due to the energy crisis during last three years. When three years ago Pakistan accepted the most controversial US aid package titled Kerry Lugar Bill, the textile exporters of Faisalabad openly offered the government that they could generate a foreign exchange revenue of $20 billion per annum which is almost three times more than Kerry Lugar aid of $7.5 billion to be given in five years. The only pre-condition was the government must guarantee the uninterrupted power supply to the industrial units of Faisalabad. The crisis emerged at a time when Faisalabad-based business community was hopeful of doubling the existing $10 billion annual export target. But instead of the proposed increase, it is feared that this year export will remain less than it was last year. When an able and efficient workforce is made redundant due to scarcity of work opportunities in a society, it is a warning to the movers and shakers of that community that a horrible time is coming ahead.
This is exactly what is happening in and around the city where the street crimes have surpassed all previous records. The city was once a host of thousands of the workers coming from the other districts of the Punjab to work in the textile sector, but the situation has reversed now. Thousands of workers have been fired as power loom factories have been closed down after suffering heavy losses. Some of the flagship industrial units have been closed, thanks to the gas and electricity crisis, the world’s highest interest rates in the banking sector and the shortage of raw material in the local market. But these are not the only factors; the government’s indifference to the crisis is the key to the imminent collapse of the textile infrastructure. The gravity of the situation was graphically highlighted by the statement of Punjab Chief Minister Shahbaz Sharif who called Faisalabad as the target of a discriminatory gas load shedding by the federal government. He defended his position by throwing the fallout on the federal government. Some of the analysts say that the discriminatory gas load shedding had led to the flight of capital from Faisalabad to Karachi or elsewhere and it is a conspiracy against the province.
In the broader spectrum, the gap between supply and demand of natural gas has reached nearly one billion cubic feet per day mark (bcfd) resultantly the management is forced to cut gas supply for industrial sector of Punjab and CNG sector of Sindh. However, the situation is likely to deteriorate in the coming months due to increase in the intensity of the cold. According to Petroleum Ministry estimates, natural gas shortfall against committed supplies is around 911 million cubic feet per day (mmcfd) in December and will increase up to 1.1 MMCFD in January 2012 and 1.4mmcfd in February, before easing down to 726mmcfd in March. It is unfortunate to forecast that the problem is likely to worsen in the coming years. According to official estimates, gas shortfalls are estimated to reach 2.5 BCFD in 2014-15, 3 bcfd in 2015-16 and 3.5 bcfd in 2016-17. The gap is estimated to peak at 5 bcfd by 2020-21, unless major discoveries and field developments are made in the coming years. The consumption of gas has increased from the year 2000 onwards on a massive scale. Initially, domestic users were consuming 32 per cent of the total gas supply, general industries 24.9 per cent, the power sector 22 per cent, commercial users five per cent, and the CNG sector four per cent. However, the ratio has now changed with domestic consumers consuming 26.07 per cent, the power sector 15.9 per cent, the CNG sector 11.85 per cent, fertilisers 7.82 per cent, and the commercial sector 4.75 per cent.
According to petroleum ministry estimates, Pakistan’s domestic gas production is expected to fall from the current 4 billion cubic feet per day (cfd) to 2 billion cfd by 2020. Demand, on the other hand, is expected to soar to eight billion cfd by that time, creating a six billion cfd shortfall.
Pakistan is losing 300 mmcfd of gas due to theft and leakages, causing a Rs20 billion loss to the gas companies in unearned revenues alone, admitted Rashid Lone, former managing director of Sui Northern Gas Pipelines, the second of the two government-owned gas distribution companies. Lone said SNGPL’s gas losses have reached 9.6 per cent, which was almost double than the world average. He said a one per cent loss amounted to Rs1.5 billion in lost revenues and 18 mmcfd gas. SSGC’s gas losses have crossed seven per cent.
Pakistan is on track to complete all the work for ensuring gas flows from the Iran-Pakistan pipeline by its contractually obligated date of December 31, 2014, said Hilal A Raza, managing director of Inter State Gas Systems, the company created to manage the international pipeline project. A failure to erect the infrastructure will be costly, though. Pakistan is liable to pay Iran $8 million per day for every day the project is delayed after the deadline. The price is equivalent to the cost of the 750 mmcfd that is expected to slow through the pipeline. In other words, Pakistan pays Iran from January 1, 2015, regardless of whether or not the gas is flowing. Pakistan has had some trouble raising financing for the project after US objections, though Raza insisted that US sanctions on Iran do not apply to the gas pipeline to Pakistan since those only apply to investment into Iran’s domestic production capacity. Pakistan is purchasing gas at its own border. Islamabad is expected to ask for China’s assistance in financing the project.
Under the Iran-Pakistan pipeline agreement, Pakistan will be able to import 750 million cfd from Iran’s gas field. The Turkmenistan-Afghanistan-Pakistan (TAP) pipeline, which is subject to extreme political risk due to the war in Afghanistan, is expected to yield another 1.3 billion cfd. Offshore LNG imports are expected to bring in another 2 billion cfd, still leaving a 2 billion cfd shortage in supply.
Citizens, business community and industrialists have condemned the government for its failure to manage ongoing gas crisis and further increase in the gas load shedding for industrial and compressed natural gas (CNG) sectors. Citizens said that Pakistan is naturally very rich with gas and other minerals and despite discovery of new reservoirs in the country, no proper attention is being paid to exploit this potential of the country. They criticised the federal government and Sui Northern Gas Pipeline Limited (SNGPL) for increasing gas load shedding. Ali Ahmed, a consumer said that they were already facing economic loss due to gas load shedding and now further increase simply means further loss for him. Khalid Mehmood, a factory owner said that his mill was closed due to unavailability of gas. I have to pay salaries to my employees despite the fact that our production has decreased considerably. The government must work on new exploration. Meanwhile, All Pakistan Textile Mills Association (APTMA) has decided to protest against the SNGPL if gas supply is curtailed for four days in Punjab. “We will come on the roads if they close our gas for the fourth day,” said the Regional office APTMA in their press release. APTMA Punjab Chairman Ahsan Bashir has authorised the leadership to decide about strike in case the SNGPL curtails gas for more than three days a week, as promised by the government. Bashir said extra ordinary general meeting of APTMA Punjab has lamented over dishonouring the agreement of four days a week gas supply by the SNGPL. He termed it as unfair for the textile industry in Punjab. Therefore, he said, the APTMA members have decided to take every possible step if curtailment continues for more than three days.
He said all the textile associations besides those from the Faisalabad are on the same page. “We will bring 10 million workers on the road,” he warned, adding, “Farmers would be directly affected by the crisis-like situation.” He said it is irony that the SNGPL has shown curtailment of three days on its website but 70 per cent of the industry has been out of gas on Sunday. Earlier in a statement, APTMA’s top leader Ejaz said the industry has a strong feeling that it has failed to highlight the importance of the industry to the government, procuring 13.5 million bales, employing 15 million workers and contributing $14 billion to the exports of the country. He said some 6 million cotton bales are yet with the farmers with a total value of Rs400 billion. He said a denial of gas supply to the Captive Power Plants of the industry has crippled the industry’s wheel altogether. “We’re fighting for gas instead of running mills,” he deplored the faulty decision making of the government. He said the system of gas rationing is not the solution in a situation when cheap price has become the real catch for stakeholders. It is high time for a revision, he said. Gohar further criticised the government for providing free gas to the fertiliser sector. He said addition of 600 MMCFD liquefied natural gas was the solution but no work on this front has so far been done.
In the face of severe shortage of gas, there seems to be no way out except gas management and it is also a fact that the gas companies are not bound to provide gas to industries during three months of winter under the gas supply agreement. Similarly, as almost all CNG stations get supply from domestic distribution lines, they almost completely choke gas for domestic consumers and as a result there is always hue and cry about low pressure or unavailability of gas. But it is loathsome that the change of stewardship of the Ministry of Petroleum and Natural Resources has not made any difference and instead the situation is becoming more complex. Suspension of gas for four day the industry would play havoc with production and exports. What a contradiction that on the one hand we are seeking market access from the United States and EU and are also boasting about prospects of getting access to bigger Indian market after giving the neighbour the MFN status but on the other hand we are unable to ensure provision of required energy to industries and businesses.
