Wednesday, January 5, 2011

Punjab industrial production hurt by energy shortage

 Punjab industrial production hurt by energy shortage 

LAHORE: The output of industrial sector in Punjab declined sharply in 2010 because of electricity and gas shortage and poor law and order conditions.

Former President of Lahore Chamber of Commerce and Industry (LCCI) Mian Anjum Nisar said the industry was crippled by 67 percent increase in electricity tariff, 18 percent mark-up rates and the energy crisis. “The industry in Punjab was more affected last year because the government discriminated against it by not providing gas to it. This resulted in higher production cost for us than for units in other provinces. This makes Punjab industry uncompetitive within the country. Up to 1,500 industrial units were closed only because of this.”
Once an industry shuts down, its financial problems increase because it has to pay financial charges without any revenues, he said. “We faced gas load shedding for 125 days while other provinces got smooth gas supply round the year,” Nisar said.
Asmat Pervaiz, a former chairman of Pakistan Steel Re-Rolling Mills Association, said the industry’s production stood at 0.7 million metric tons in 2010, which was only 20 percent of its capacity. “In winter, almost 100 percent industry was closed. It hadn’t run at full capacity in summer either, mainly because of non-availability of gas and electricity.”
The decline in production was not reflected in prices because of economic slowdown in the country, which reduced construction activity, Pervaiz said. “Over 200,000 people are employed in Punjab steel melting industry who started crying when we asked them to go on leave. We are unable to cope with this situation as almost all the industry is running in losses.”
Textile sector and auto parts industry, however, registered growth during the year.
Syed Nabeel Hashmi, vice chairman of Pakistan Association of Automotive Parts and Accessories
Manufacturers (PAPAM), said motorcycle production increased to 1.7 million units from 1.4 million units. “Car sector registered eight percent growth which is encouraging in Pakistan’s current economic situation. Tractor production also increased following growth in rural income,” he said.
Hashmi said that some vendors faced problems in recovering dues from Chinese manufactures.
Textile export grew by 25 percent and profit before tax of the sector registered an increase of 20 to 22 percent.

Chairman of All Pakistan Textile Mills Association (APTMA) Gohar Ijaz said increased prices of raw cotton shifted over Rs200 billion to the rural economy and benefited the farmers. But, he said, the industry faced various challenges including energy shortage and high mark-up rates. “New investment in the textile industry has stopped,” he remarked. He further said EU concession to the Pakistani products was a major breakthrough in 2010 but the government failed to exploit this because it ignored the real stakeholders.

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