Gas shortages affect Pakistani exports, adding to economic stress | Business and Economic News

About $ 250 million worth of textile exports were lost in the last month as Punjab mills had to be shut down for 15 days due to scarce fuel.

Pakistan’s shortage of natural gas is hurting its major export industry, and is further stressing the economy, which is already struggling with accelerating inflation and weakening the currency.

About $ 250 million worth of textile exports were lost last month when Punjab mills were forced to close for 15 days, said Shahid Sattar, executive director of the All Pakistan Textile Mills Association. The plant in the province is dependent on 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 declined in recent years. But fuel competition – used as a commodity for electricity and used for heating and cooking – has intensified due to global shortages, sending Pakistan to levels it cannot afford.

The textile industry, from denim jeans to hats to buyers in the United States and Europe, is one of the country’s few economic hubs. Production grew by almost 6% in the nine months to March 2021 and the sector accounted for 60% of all exports, according to government data.

“High gas prices are prohibitive,” Sattar said in an interview. “The shortage of supply is due to the inability of the Ministry of Energy to organize its supply, and it is detrimental to the future of Pakistan’s exports and economy.”

The country exported $ 11.4 billion worth of textiles in the nine months to March 2021, according to government data. Based on those figures, those $ 250 million were about 20% of Pakistan’s textile exports in the last month, according to Bloomberg estimates.

Gas shortages are plaguing Pakistan at a critical economic and political time. The country is struggling to accelerate inflation and weaken the currency, with support for Prime Minister Imran Khan’s ruling party being reduced before the 2023 national elections. A condition for the resumption of the $ 6 billion bailout program with the International Monetary Fund.

Ministry of Energy officials did not respond to phone calls for comment.

Pakistan, which is heading into the coldest months of the year, launched an emergency tender to import more LNG in November, after suppliers withdrew from shipments, amid rising prices and rising global demand. Recently, gas trader Gunvor told Pakistan that he would not be able to make deliveries scheduled for January 10.

The country is experiencing a shortage of gas in the winter, as Pakistan’s natural gas fields are depleted by about 9% a year and imported LNG is very expensive, Energy Minister Hammad Azhar said at a news conference in late December. Pakistan has announced a round of bidding to help find more oil and gas reserves, Azhar said in a Twitter message on Friday.

The government restored gas supplies to the textile sector last Wednesday, but power outages are often hampering operations, Sattar said. The mill will only be able to operate at about 80 percent of its capacity if the situation persists, he said.

“Our history is riddled with episodes of‘ stop-go ’growth caused by energy shortages and exorbitant costs, both of which are the result of poor government management,” Sattar said.