KARACHI - The textile sector faced a decline in its growth due to severe energy crises specifically, value added sector in the country felt the burden of 100 bp increase in EFS rate, besides a rise in energy tariffs. The lower availability of electricity was also a key constraint for the value-added textile sector.

According to State Bank’s quarterly report, unfortunately, due to circular debt local refineries could not provide required FO quantity to power generation companies. As a result, import burden has increased significantly for FO provision.

The growth seen in Jul-Dec FY10 period will be challenging to sustain in the remaining months of FY10 given the inadequate energy balances in the country. For instance, the increase of 0.5 percent in gas exploration during Jul-Nov FY10 period does not seem sufficient to fuel a quick recovery. It must be noticed here that gas constitutes more than 50 percent of total energy consumption by industries. Similarly, scanty power investments in recent years allowed only a small increase in electricity generation capacity; which too often remains under-utilized due to water shortages or insufficient provision of gas and/or furnace oil.

For instance, as winter rains remained low in FY10, the Hydel generation capability declined sharply in January 2010.
Similarly, gas sales to power sector also declined during H1-FY10. Consequently, the use of furnace oil (FO) for thermal generation increased.