ISLAMABAD, July 9: The government has decided in principle to provide Rs4 billion relief to the textile industry through reduction in recently announced gas price increase for industrial and captive power plants, it is learnt.

The government had recently increased gas rates for industrial consumers by 31 per cent and for captive power plants of textile units by 68 per cent.

The textile industry has since been protesting over the price increase on the ground that it was losing competition in the international market and had announced to go on strike from July 11.

In an effort to persuade the textile industry to call off planned strike, the ministry of petroleum and natural resources has been directed to increase gas rates for Liberty Power Plant to the extent of Rs4 billion that would reduce government revenue. As a result, textile-specific gas rates for industrial sector and captive power plants would reduce by more than 50 per cent.

Sources said the petroleum ministry had also been asked to look into other possible avenues so that tariff adjustments could be made through containing government’s revenue in the form of gas development surcharge but without affecting gas rates already announced for other consumer categories.

A special ministerial committee on gas rates would consider recommendations of the petroleum ministry within this week and then take the textile industry into confidence about the decisions. The textile industry, the sources said, had assured the government that they would consider to review their strike call after the ministerial committee comes out with a decision. Until then, they would not go on strike as originally announced for July 11, the sources said.

About two dozen businessmen belonging to textile manufacturing chain and exports had a meeting with Federal Minister for Commerce Ahmed Mukhtar on Tuesday where different options were discussed to reduce gas rates without affecting overall revenue requirements of the gas utilities. But the process the government would lose about Rs4 billion in gas development surcharge. The gas development surcharge is shared by the provincial governments on the basis of their gas production.

The sources said the textile industry had been demanded complete withdrawal of recent increase in gas rates for industrial units and captive power plants but was told that such a step may not be possible because of government’s economic constraints. The industrial sector is of the view that it was already paying highest gas rates to compensate cross-subsidies currently available to domestic and fertiliser sectors and hence these subsidies should be withdrawn to ensure equitable gas rates for all consumer categories.

The government, however, is unable to do away with subsidy for fertiliser and domestic sectors because of long-term binding gas supply agreements and political considerations, respectively.