$700m boost in exports expected after gas/RLNG pricing reforms: APTMA

November 03, 2023 (MLN): The All Pakistan Textile Mills Association (APTMA) expects exports to increase by as much as $700 million per month due to the removal of inter-province discrimination and the provision of a level playing field to aid industrial units and new units that have been set up during the last 3 years, said a press release issued by APTMA today.

An additional $300 million per month in exports can be achieved if cross-subsidies of Rs10.84 are removed from power tariffs for industrial consumers, it added.

APTMA welcomed the government's decision on gas/RLNG pricing reforms, stating that it was necessary to ensure the long-term sustainability of Pakistan's gas sector, which was on the verge of collapse and has run up a circular debt of nearly Rs3 billion.

Additionally, APTMA stated that this reform unlocks export potential and drives positive sentiment for textile exporters as exports of goods in October 2023 were already up by $639 million, compared to July 2023.

Reforms in gas/RING pricing will help ease the burden of the textile industry's crisis by allowing the government to ensure an adequate supply of gas/RLNG throughout the country, it added.

This reform will also provide much-needed certainty as to the availability of gas/RLNG and provide exporters with a forward-looking view regarding the processing of export orders.

Revised pricing and availability ensure maximum utilization of production capacity and export potential.

Distortions in gas/RLNG pricing over the years have caused several issues across the economy, including a slowdown in large-scale manufacturing and exports, a drying up of investment in new gas field exploration, and premature depletion of existing gas fields.

They have had further negative implications for the overall fiscal and current account deficits and other macroeconomic indicators.

In the absence of these reforms, both SSGC and SNGPL were being forced towards bankruptcy and suspension of several critical operations.

Removing distorters in gas/RLNG prices will also incentivize fresh investment in gas field exploration activities that will, over time, ease the indigenous gas shortage, and help ease Pakistan's balance of payments and external debt difficulties by reducing dependency on imported energy.

APTMA further stated, “we hope that the government will follow up on gas reforms by implementing reforms in the power sector to allow export-oriented units to benefit from competitive electricity prices.”

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