Shortage of gas and cotton: exporters may not fulfil Rs 700 million foreign orders

LAHORE  (October 30, 2010) : Central Chairman Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA) Ejaz Khokhar has feared that exporters might not be able to fulfil foreign orders of $700 million due to gas loadshedding to the textile processing units and exorbitant cotton yarn prices.

Talking to Business Recorder, Chairman PRGMEA said the production cost has risen to 40 percent due to short supplies of gas and cotton, which the customers were not ready to bear with the industry. "The customers are ready to pay 5 to 10 percent extra profit margins to textile exporters in Pakistan, which is still far below to the production cost of the industry," he said. Ejaz was heading to Faisalabad to attend a meeting of processors, badly hit by all of a sudden gas loadshedding.

Ejaz said the production of export orders is stuck in the pipeline due to the halted operations at processing, dyeing and finishing stage with unavailability of gas to the Captive Power Plants (CPPs).

It may be noted that the SNGPL has issued a schedule for the forced closure of gas due to low pressure, leading to crisis in industry and CNG sectors. About 50 percent supply cut has perturbed the industry and CNG stations and they fear heavy losses. "The textile chain right from weaving to downstream is turning into bad shape due to short supply of gas and cotton yarn simultaneously," he said. He added that the garment industry was supportive to the textile processing units's strike, which is being planned in the wake of heavy gas loadshedding in textile hubs like Faisalabad, Multan and Lahore.

He stressed that the government should ensure a cushion to the textile industry on gas load shedding until December this year to enable the industry fulfil export orders.

About unavailability of cotton, Ejaz said many investors, farmers and ginners had withheld cotton stocks to cash the rising cotton prices in the US, already hit the record level of $1.30 per pound.

He said the government should take serious notice of the situation, as the value-added industry was not demanding a ban on exports of cotton or cotton yarn, as it would further be detrimental to the industry. He demanded of the TCP of importing a buffer stock of about 2 million bales immediately, bales, Pakistan is already short of 3 to 3.5 million bales at present. He feared that textile business in Pakistan would shrink heavily, impacting directly job situation in the market and leading to social unrest massively.