Textile exporters consider legal challenge to gas price increase

LAHORE: Textile industry, disappointed at massive jump in gas prices, is considering making a legal challenge to a government upward revision in gas tariff, it is learnt on Monday.

All Pakistan Textile Mills Association (APTMA) has decided to contest the 38.46 percent increase in gas tariff before the Lahore High Court “what it called to avoid any negative implications for the textile industry”.

According to a letter to members, APTMA noted that the government increased the rate of regasified liquefied natural gas (RLNG) from $6.5 to $9/ MMBTU for export-oriented sectors.

“Stakes are very high particularly for the industry located in Punjab as continuous gas supply @$ 6.5/ MMBTU to entire value chain, as approved by the cabinet till June, 2022, is the only workable energy source for their viability and competitiveness viz a viz regionally and rest of the country,” correspondence to members reads.

“Under these circumstances, after due deliberation, APTMA has decided to contest the increase in gas tariff before the Lahore High Court.”

The government had decided to increase gas tariff for textile units by 38.46 percent to $9/mmBtu from present $6.5 from November 15, 2021 for three and half months, which was dubbed by industry as a “setback for export-oriented units”.

A senior member of All Pakistan Textile Mills Association (APTMA) earlier was upbeat about reversal of the tariff hike as they had proactively taken up this issue at the highest level. “We have made it clear to the government that exports of textile will be adversely affected due to resultant high cost of production,” he said.

“If implemented, the government's decision to increase captive power gas tariff for export-oriented industry by whopping 38 percent will add to cost of production.” “Besides, it will further create distortion in already lopsided energy market of the country,” he added.

However, it seems that APTMA’s efforts were in vain as these met with a lukewarm response from the government. On the other hand, petroleum division on November 30, 2021, asked Sui Northern Gas Pipelines Ltd (SNGPL) to take steps for eliminating misuse of concessionary natural gas tariff, if any, by export-oriented industry to ensure efficient use of the gaseous fuel.

According to a letter dated November 30, 2021, written by DG Gas, petroleum division, to the managing director of SNGPL, the former stressed on the latter that to implement the decision of the cabinet for achieving desired objective of efficient gas/RLNG use, “certain steps should be taken for eradicating misuse of concessionary tariff”.

In this connection, “SNGPL has been advised to take steps for maintenance of regional database of export units (process and captive) in addition to monitoring of consumption pattern fortnightly by industrial units with a view to determining gas usage by both -process and captive.”

Moreover, the ministry also asked the gas utility to take steps for monitoring and reporting of captive units’ switchover to power grid through surveillance system including liaison with power distribution companies (DISCOs), inspections, and other desirable measures. SNGPL was further asked to ensure proper verification of record at regional and head office level before processing subsidy claims.