LNG, cheap loans for industry proposed
LAHORE, July 14: In its next meeting the federal cabinet will consider proposals on import of liquefied natural gas (LNG) to remove gas shortage for the industry during the next winter and provision of low cost financing to the textile industry to help it undertake expansion and modernisation.
The proposals on these issues have been finalised by the two separate committees formed by Prime Minister Raja Pervez Ashraf early this week during his meeting with a delegation of the All Pakistan Textile Mills Association (Aptma).
The committee on LNG import comprises Aptma leader Gohar Ejaz and secretaries of ministries of finance and petroleum and natural resource.
The other committee constituted to look into the possibility of setting up a technology up-gradation fund for providing long-term loans to the industry and reducing interest rate on the textile industry’s existing loan stock of about Rs500 billion comprised Mr Gohar and secretary of ministry of finance.
The committee on LNG import has reportedly suggested arrange floating charter vessels using the existing terminals of two private companies as a short-term measure to daily add 600mmcfd gas to the network of the Sui Northern Gas Pipeline Limited (SNGPL) for removing shortages for the industry in Punjab.
The medium- to long-term solution to the gas shortages in Punjab will require the government to set up an exclusive LNG terminal at cost of $200 million over 12 to 18 months.
The funds to be collected by the government under the recently imposed gas infrastructure development surcharge on the industry will be used to finance the establishment of the terminal. The government expects to collect up to Rs24 billion from the new levy.
On financing the expansion and modernisation of the textile industry, the committee has suggested creation of a fund to subsidise their cost on the existing loans unless the State Bank of Pakistan decides to bring down its key discount rate to 7-9 per cent.
Additionally, a technology up-gradation fund will be set up for financing future investment in the industry at cheaper rates with a view to kick-starting fresh investment in the economy.
The proposals have been drawn up in view of the financial incentives given by India to its textile industry, which makes Pakistan far less competitive compared to its regional rival by raising its costs of doing business.