THE apex body of the textile industry is upbeat over the latest assurance by the ministry of water and power to virtually exempt textile sector from power loadshedding in the coming winter notwithstanding the fact that such hopes in the past have often proved to be an illusion.
The assurance was given by the secretary of the ministry during a meeting with a delegation of All Pakistan Textile Mills Association (APTMA) on October 26. He told them that the textile sector would receive ‘maximum’ supply of electricity this winter. It reminds one of the frequent promises made so generously in 2009 and 2010 by the then minister of water and power, now the country’s prime minister, about an end to the ‘curse’ of loadshedding. No promise was fulfilled. If the latest promise is honoured, the textile industry can come out of its long-suffered bad patch.
On April 17, Pakistan Electric Power Company (Pepco) had declared that the textile industry in Punjab has been exempted from loadshedding. And if any textile unit still faced loadshedding, it could be because of the local/Disco constraints or any other reason. However, the textile units were told to cut down 25 per cent of their load during peak hours by switching off their air conditioners and extra lights.
How effective that exemption has been is evident from a statement of the APTMA made on September 23 which revealed that the so-called exemption from loadshedding to textile industry in Punjab was withdrawn in May only after a month. It accused the Energy Management Cell (EMC) of the ministry of water and power of ruining the Punjab-based textile industry, which continues to suffer seven hours of loadshedding daily. This energy shortage has resulted in reduction of 30 per cent capacity of the textile industry.
APTMA also accused the Cell of coming up with unworkable solutions. The solutions it proposed were 40 per cent and 25 per cent reduction of load by the industry during peak and off-peak hours respectively.
The EMC seems to be unaware that the spinning and weaving mills running on independent feeders are designed on the basis of uninterrupted power supply for 24/7 and 365 days. So, it is not possible to reduce that much load in any case.
The data released by Pakistan Bureau of Statistics for 2011-12 fiscal year showed that the textile sectors’ cumulative exports during the period declined by 10.38 per cent to $12.35 billion against $13.78 billion in the same period in the previous year.
And its share in Pakistan’s total exports also declined considerably. So far, the textile industry’s contribution to total exports has been around 54 per cent. Meanwhile, the exports of high value-added items such as knitwear, bedwear, towels and readymade garments have showed negative growth during this period. The decline occurred mainly due to the severe energy crisis.
But Textile Minister Makhdoom Shahabuddin does not believe that the principal reason behind the shifting of textile units to Bangladesh was severe energy crisis. According to him, it is the preferential treatment given to Dhaka for being a least developed country (LDC) by European Union and the United States. It results in tariff-free textile exports which is equally enjoyed by Pakistani units in Bangladesh.
Saleem H. Mandviwalla, chairman of the Board of Investment, while commenting on the relocation of textile units to Bangladesh in September last year, had said that investors are like birds which have no country of their own and prefer to stay where they find profit and security of their investment.
A Lahore daily revealed last week that about 1,579 industrial units, including textile units, across-the-country were shut down due to loadshedding and other problems in the last five years.
On October 25, the Standing Committee of the Senate on textiles was informed that the industry was facing losses due to lack ofutilities, certified cotton seed and bad image abroad about production capacity. Our textile exports are at a disadvantage in the international market because the competing industries are provided ample facilities and subsidies by their governments. The committee looked at hurdles being faced by the entire textile sector and made recommendations for the resolution of problems.
The fact remains that due to financial crunch and low releases of funds by the government, the ministry of textiles is facing difficulties in implementing some measures taken under the Textile Policy. However, as a result of the failure to implement textile policy, the export target of $25 billion may remain a mere dream.
Some exporters seek orders through buying houses that charge high commissions for their services, because many foreign buyers do not like to visit Pakistan.
In March, Pakistan’s key textile sector was reported to have lost export orders worth an estimated $1 billion in the first seven months of the previous fiscal year due to extensive power outages, compelling foreign buyers to place their orders in other countries. The industry is now accepting only those orders which it could execute after taking into account the prevailing schedule of gas and power shortages.
In February this year the APTMA has sought a relief package from the government for the industry to enable it overcome the effects of the unprecedented electricity and gas crisis. The package must include rescheduling of loans and allowing 50 per cent rebate on markup for long term loans, it said.