Karachi, July 22, 2024 – The Pakistan Yarn Merchants Association (PYMA) on Monday voiced serious concerns over the high payments of capacity charges to Independent Power Producers (IPPs), warning that these could lead to an industry shutdown.
PYMA Chairman Sheikh Khalil Qaiser, alongside Senior Vice Chairman Sohail Nisar, Vice Chairman Jaweed Khanani, and members of the Executive Committee, has urged the government to reconsider its contracts with IPPs for the sake of the economy. They called for the cancellation of these contracts, expressing concerns that the exorbitant electricity and gas rates could devastate the textile industry and severely impact exports.
PYMA officials emphasized that the textile sector is already grappling with unsustainable costs due to elevated energy tariffs. They warned that additional capacity charges imposed by IPPs could force many industries to cease operations.
“The government claims to prioritize economic stability and national development, yet such policies jeopardize industrial operations,” PYMA officials stated in their appeal to the government.
Criticizing government payments to IPPs, they highlighted instances where IPPs have received substantial payments despite minimal electricity generation, questioning the transparency of governance. They noted that current contracts obligate the government to purchase electricity at 750 rupees per unit from certain IPPs, urging transparency and accountability in these dealings to alleviate concerns within the business community.
“The burgeoning capacity charges imposed by IPPs have rendered electricity rates unaffordable. Without intervention, industrial closures loom ahead,” PYMA officials added.
PYMA office-bearers urged the government to intervene swiftly to reduce production costs, sustain industrial operations, and bolster exports. They stressed the need to lower electricity and gas rates by revisiting contracts with IPPs to ensure uninterrupted industrial activity and foster economic growth.
They pointed out that the textile industry, which is one of the largest contributors to Pakistan’s GDP and employment, is particularly vulnerable to these high charges. The officials noted that many small and medium-sized enterprises (SMEs) within the sector are already operating on thin margins and cannot absorb the additional financial burden.
The association also called for a comprehensive review of the energy sector’s regulatory framework. They suggested that the government explore alternative energy sources and invest in renewable energy projects to reduce dependency on costly IPPs. This, they argued, would not only bring down energy costs but also promote sustainability and environmental responsibility.
In addition, PYMA officials urged the government to engage in dialogue with industry stakeholders to develop a more balanced and equitable energy policy. They emphasized the importance of a collaborative approach in addressing the current energy crisis and ensuring the long-term viability of the industrial sector.
“The future of our industry and the broader economy depends on immediate and decisive action from the government. We are ready to work together to find solutions that will benefit all parties involved,” PYMA officials concluded.
The call to action from PYMA underscores the urgency of the situation as the textile industry braces for potential shutdowns, which could have a ripple effect on employment and economic stability across the country.