All Pakistan Textile Mills Association (APTMA) has warned the Special Investment Facilitation Council (SIFC), of potential further declines in exports due to the lack of a financially sustainable energy source.
In a presentation to the SIFC, textile millers emphasised the urgency of addressing this issue and proposed measures to enhance the competitiveness of textile exports globally.
One major concern highlighted by the association was the absence of a financially viable energy source, which hampers manufacturing sustainability and global competitiveness.
To address this challenge, APTMA suggested several measures including operationalisation of the Competitive Trading Bilateral Contracts Market (CTBCM) and facilitating business-to-business (B2B) power contracts with competitive end-use prices.
APTMA also proposed leveraging green energy sources such as geothermal plants and hybrid solar/wind plants to procure energy and advocated for an increase in the cap on solar net-metering for industrial consumers.
Pakistan’s textiles and apparel exports rose by 54 per cent to $19.3 billion in FY22, thanks to regionally competitive energy tariffs (RCET) of 9 cents/kWh in 2021-22. However, a subsequent increase in power tariffs to over 14 cents/kWh led to a decline in exports to $16.5 billion in FY23.
Power tariffs for industrial consumers have risen to approximately 17.5 cents/kWh, making production financially unfeasible. This rise is attributed to factors such as quarterly tariff adjustments, fuel price adjustments, and declining power consumption. Compared to regional economies like Bangladesh, India, and Vietnam, Pakistan's power tariffs are more than double, exacerbating the industry's challenges.
Moreover, gas prices for industrial consumers have surged by 223 per cent since January 2023, rendering captive generation financially unviable. Consequently, Pakistan’s textiles and apparel exports have stagnated at $1.4 billion per month, significantly below the industry's installed capacity of $2 billion/month. This situation has led to idle investments of approximately $5 billion, adversely affecting investor sentiment and confidence in the economy.
