Gas Shortage Leads to Pakistan Losing 20% of Vital Textile Exports

Gas Shortage Leads to Pakistan Losing 20% of Vital Textile Exports

Bloomberg

Pakistan’s natural gas shortage is hurting its crucial textile exports, according to an industry trade organization, putting even more stress on the nation’s struggling economy.

About $250 million of textiles exports were lost last month after mills in Punjab were forced to shut for 15 days, said Shahid Sattar, executive director of All Pakistan Textile Mills Association. Factories in the province are dependent on power generated from regasified imports of liquefied natural gas, while domestic supply is being diverted to other regions, he said.

Pakistan has become a fast-growing import market for LNG as local supply has subsided over the last few years. But competition for the fuel — used as an electricity feedstock and for heating and cooking — has intensified due to global shortages, sending spot prices to levels that Pakistan can’t afford.

“The high gas prices are prohibitive,” Sattar said in an interview. The “supply shortfall is due to the energy ministry’s inability to arrange supply, and is hurting the very future of Pakistan’s exports and economy.”

Pakistan’s government, which has been criticized by the opposition for mishandling LNG imports, refutes claims that textile exports dropped because of low gas supplies. More than 90% of mills shifted to using electricity from the grid when gas wasn’t sent to their power generation units last month, Energy Minister Hammad Azhar said by phone, adding that “the electricity is being offered at regionally competitive rates.”

Pakistan restored gas to the textile sector last Wednesday after the association halted litigation against the government on the supply cut, and agreed to energy audits of their captive power plants. Only half of the companies have restored connections, while the rest are still running their mills on the national grid, according to the ministry.