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Punjab textile units start downsizing

Updated April 17, 2014

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- File Photo
- File Photo

LAHORE: Reports of labour unrest started trickling on Wednesday from parts of Punjab as several spinners and weavers began to cut or close down production in panic over mounting losses because of short supply of cheaper gas, long power cuts and massive appreciation the rupee against US dollar.

“In Sargodha, the workers thrashed the manager of a mill after they were laid off,” a labour department official told Dawn on Wednesday. Although the mill management couldn’t be reached immediately, Seth Mohammad Akber, Senior Vice-Chairman of Aptma, confirmed the incident.

“A similar incident took place in Bahawalpur where the mill workers kept the roads blocked for several hours.”

Punjab’s textile industry contends that scores of spinners, weavers and processors have already shut down their operations or significantly decreased their production ever since the “exchange rate started to climb without any warning” in early March.

The entire textile industry from yarn makers to apparel producers are calling for compensation for their losses on account of falling value of the dollar on rising forex reserves.

“The entire textile industry in Punjab is faced with a severe crisis for quite some time owing to short gas supply and long power cuts. The 12pc appreciation of the rupee has accentuated this crisis, forcing many to retrench workers to avoid further losses,” argued Gohar Ejaz, former Aptma chairman.

“The only solution to prevent this crisis from getting uglier lies in restoration of gas supplies to the factories to help them reduce their production costs. The road is running out. The government must act now.”

Petroleum and Natural Resources Minister Shahid Khaqan Abbasi is reluctant to increase gas supplies to the textile manufacturers from the current level of six hours a day (approved for winter months) in spite of decrease in domestic demand on rising temperatures and intervention by the Punjab chief minister and the textile minister. The textile ministry has moved a summary for the ECC’s consideration to increase gas supplies to Punjab’s textile factories round-the-clock five days a week.

Pakistan Towel Manufacturers and Exporters Association on Monday warned of closures if the government didn’t take effective steps to remedy the situation. “The exchange rate loss of 12pc will ruin exports,” it had stated.

A Pakistan Textile Exporters Association, an alliance of Faisalabad’s textile industry official said rising exchange rate had severely damaged exports.

“The exporters had booked orders at Rs108 a dollar. Now when the remittances are being realised we are getting Rs96-97 in exchange for our hard earned dollars,” said a knitwear exporter who requested anonymity because he is on the board of a public company. “Punjab’s industry is unable to even compete with the Sindh and Khyber Pakhtunkhwa based exporters because they are using gas round-the-clock seven days a week.”

The textile exporters across Pakistan are losing almost Rs15bn a month on account of exchange rate appreciation as their monthly exports stand at $1.2bn. In Punjab, which houses three quarters of the industry, the exporters have lost just above Rs11bn in March on rupee revaluation, according to the industry sources.

The Punjab-based industries are losing an additional Rs6.6bn a month because of power and energy shortages. Barring Punjab-based factories, the entire textile sector in the country generates power at Rs6 per unit because of round-the-clock gas supply for captive generation. Punjab is getting gas for only six hours and the power supply is limited to 16 hours a day. With the cost of electricity having doubled since August to over Rs16 per unit, the industry in Punjab is obliged to bear additional expenses on their energy bills, making it far less competitive than the exporters from Sindh and KP.

The textile industry in Punjab should be given gas on the priority list basis, said SM Tanveer, Aptam Punjab chairman.